Private rental growth slowed in July, falling to 5.9% from 6.7% the month before, ONS data shows.
Despite the slowdown rental growth is outstripping house price inflation, which rose by 3.7% year-on-year to £269,000 in June.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “Stratospheric rent rises of around 10% have given way to a far less strenuous 5.9%.
“The problem for renters is that this has been cumulative. Rises on top of rises mean they’re paying far more to put a roof over their heads.
“Some of the easing in rent rises has been caused by a slight reduction in the number of new tenants, priced out by rising rents, which continue to climb ahead of average wages.
“It means that despite fewer properties coming to the market, demand is not outstripping supply in quite the same way it was.”
Regional differences
Rental growth is highest in the North East, at 8.9%, followed by the North West (7.8%) and East Midlands (4.4%).
It was slowest in London (0.8%), the South West (1.5%) and the South East (2.8%) – suggesting that affordability is keeping a lid on increases in more expensive regions of the UK.
Alex Upton, managing director – specialist mortgages & bridging finance, Hampshire Trust Bank, said: “A modest slowdown doesn’t change the underlying picture. We are still significantly short of the rental stock needed to meet demand, and that structural gap will keep upward pressure on rents for the foreseeable future.
“That’s the key message for brokers and landlords. While the market may be adjusting at the margins, the long-term fundamentals haven’t shifted. Professional landlords will continue to invest in quality assets, and strategic portfolio planning remains essential. Securing the right funding and preparing for future regulation will be critical in navigating what comes next.
“Over time, it’s also vital that we focus on the right kind of supply. A resilient rental market depends not just on volume, but on quality, accessibility and long-term affordability. Achieving that requires joined-up thinking, targeted investment and policy that supports both tenants and landlords.”