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The decade-long rent surge finally runs out of road

For much of the period between 2017 and 2023, renting in Great Britain meant accepting that your rent would almost certainly be higher next year. The post-pandemic surge alone pushed national asking rents up by double digits in consecutive years, driven by a perfect storm of suppressed supply, soaring mortgage costs pricing would-be buyers out of homeownership, and a flood of demand from returning city workers and students.

That era now appears to be over.

REalyse data tracking asking rents across England, Scotland, and Wales shows the GB average oscillating within a relatively narrow band — broadly between £1,610 and £1,795 per month — throughout 2024 and into 2026, a plateau that stands in sharp contrast to the near-uninterrupted upward trajectory of the previous seven years. When measured in real terms against consumer price inflation, significant parts of the market are not just pausing; they are retreating.

The story is not uniform across the country, but the direction of travel is clear: the rental market's structural supply crisis has not been solved, yet rents are no longer climbing. Something has shifted on both sides of the equation.

What the data actually shows

REalyse analysis of rental listing trends across more than 750,000 listings over the past 24 months reveals a market that has quietly lost its momentum.

At a regional level, the divergence is striking. Scotland — where the Scottish Government introduced emergency rent controls in late 2022 under the Cost of Living (Tenant Protection) Act, subsequently extended and refined — has seen year-on-year asking rent growth slow to just +0.24%, effectively zero in real terms. It is the clearest example on the GB map of what happens when legislative pressure directly constrains rental pricing power.

But Scotland is not alone. The South East of England, where the average asking rent sits around £1,666 per month, has recorded year-on-year growth of just +1.89% — below the prevailing rate of consumer price inflation and a fraction of the 8–12% annual increases seen in this market during 2021–2023. The East of England tells a similar story, with growth of +1.70% year on year.

Even London, which has long been the engine of rental inflation in Britain, has seen its growth rate compress dramatically. REalyse data shows London's average asking rent now around £2,770 per month, with year-on-year growth of approximately +3.73% — meaningful in absolute cash terms, but a far cry from the 15%+ surges that made headlines just two to three years ago.

The regions still registering faster growth — the North East (+9.65%), Yorkshire and the Humber (+6.32%), the North West (+5.84%) — are doing so largely because they started from a much lower base. With average asking rents in the North East sitting closer to £1,051 per month, there remains more headroom before affordability becomes the hard ceiling it already represents in the south and in Scotland.

The supply paradox: fewer landlords, but rents not rising

On the face of it, the supply story should still be pushing rents up. The number of private landlords across Great Britain has been shrinking since HMRC's restriction of mortgage interest tax relief (commonly known as Section 24) began phasing in from 2017, reaching full implementation by 2020. The policy means that many landlords who hold residential property in their personal name can no longer offset their full mortgage interest against rental income — a change that has materially eroded profitability for leveraged landlords and accelerated the exit of smaller operators from the market.

The April 2016 introduction of a 3% Stamp Duty Land Tax surcharge on second homes and investment properties (subsequently raised to 5% in the Autumn 2024 Budget) has further dampened acquisition appetite. HMRC data has consistently shown a decline in buy-to-let mortgage approvals and new landlord registrations in the years that followed. Estate agents across the country report that landlord instructions — properties coming to market for sale from exiting landlords — have become a routine feature of stock lists that were near-empty just three years ago.

Yet rents are not responding as classical supply-side economics would predict. The answer lies at the demand end of the equation: affordability has become the binding constraint. REalyse data shows the average flat across Great Britain — by far the most listed property type with over 418,000 listings in the past 12 months — commands an average asking rent of approximately £1,647 per month. Against ONS median earnings data showing full-time workers earning around £37,000–£38,000 per annum (roughly £3,100 per month before tax), a one-bedroom flat in most of southern England already consumes well over 40% of net take-home pay. Tenants have hit the ceiling, and landlords — however motivated to push rents higher — are finding that the market simply will not clear at higher prices.

This is not a story of oversupply. Vacancy rates remain low and days-on-market figures in most areas, while edging up from the post-pandemic lows, still reflect a market where well-priced rental properties let quickly. The pause in rent growth reflects a market in equilibrium — a fragile, uncomfortable equilibrium, but one that has effectively capped the upward pressure.

Scotland: a preview of regulatory outcomes

Scotland's near-zero rental growth (+0.24% year on year on REalyse data) deserves particular attention, because it offers a live case study of how regulatory intervention reshapes market behaviour well beyond the formal scope of the legislation.

The Cost of Living (Tenant Protection) (Scotland) Act 2022, and the subsequent legislative framework that replaced it, placed caps on in-tenancy rent increases and restrictions on evictions. The policy intent was clear: protect tenants from runaway rent increases during a cost-of-living crisis. The consequences for the market have been more complex.

Many Scottish landlords responded not by absorbing the controls but by exiting the sector entirely — selling their properties at a time when capital values, while softer than their peak, remained supportable. Others simply let tenancies lapse and converted properties to short-term lets or sale. The net effect has been a tightening of available supply even as demand has moderated. Rents for newly-let properties — where the controls apply differently — have not fallen; they have simply stopped rising, because the pool of tenants willing and able to pay more is shrinking, and the pool of landlords willing to take on new tenancies under the prevailing regulatory conditions has also contracted.

The Scottish experience is instructive for England. Not because the Renters' Rights Act replicates Scottish rent controls — it does not — but because it demonstrates how regulatory uncertainty itself reshapes market behaviour ahead of formal implementation.

The Renters' Rights Act effect: behavioural shifts before the ink is dry

England's Renters' Rights Act 2025 — which abolished Section 21 "no fault" evictions, strengthened grounds for landlord possession, introduced new requirements around rent increase challenges, and created a landlord register — has already generated measurable shifts in the market, some of which predate its formal commencement.

REalyse data and wider industry reporting suggest several patterns:

Accelerated tenancy churn ahead of commencement dates. In the months leading up to the Act's key provisions taking effect, there was a discernible uptick in Section 21 notices served and in landlords seeking to restructure their tenancy books — either returning properties to vacant possession for sale, or converting to periodic tenancies on revised terms before the new framework applied.

A modest lift in supply to for-sale markets. REalyse sales listing data shows an increase in ex-landlord properties coming to market, particularly in the sub-£350,000 price band where leveraged buy-to-let was most concentrated. Many of these properties are flats — consistent with the profile of landlords most exposed to Section 24 and most concerned about managing possession risk under the new eviction regime.

New-to-market landlords adopting more selective tenant criteria. Anecdotally reported by agents and confirmed in patterns visible in REalyse listing data, there is evidence of increased selectivity at the point of tenancy offer — landlords applying more conservative income-to-rent requirements and requesting longer reference periods — as a hedge against the more constrained ability to recover possession under the Act.

Flat share and room rental uptick. REalyse data shows flat shares and room rentals remaining well-listed, with average asking rents around £1,246 per month — the most affordable bracket in the private rental market. As asking rents for self-contained flats have plateaued around £1,647/month nationally, the relative affordability of shared accommodation is sustaining demand in that sub-sector.

None of these shifts represent a collapse. But taken together, they describe a market in transition — one in which landlords and tenants alike are repositioning ahead of a changed regulatory landscape, and in which the simple mechanics of rent-setting have become considerably more complex.

Outlook: stagnation, rebalancing, or something else?

The most likely scenario for GB rents over the 12–18 months ahead is continued nominal stagnation with regional bifurcation. The North and Midlands — where rents remain more affordable relative to incomes and where the landlord exodus has been less severe — may continue to see growth in the 4–8% range. But in London, the South East, the East of England, and Scotland, real-terms rent growth is likely to remain flat or mildly negative.

The missing piece in this picture is new supply. REalyse planning data consistently shows that purpose-built rental development — particularly Build to Rent — remains heavily concentrated in a small number of cities (London, Manchester, Birmingham, Leeds, Edinburgh), and that the planning pipeline, while active, is not delivering at a scale sufficient to structurally rebalance supply and demand across the broader market.

That means the current pause in rent growth is not a sign of a market healing. It is a market running out of headroom — from both directions. Landlords are squeezed on costs and regulation. Tenants are squeezed on affordability. The equilibrium that results is one of compressed rental activity, rising void periods at the margins, and a gradual further attrition of the private rented sector's size.

For investors tracking rental yields — which REalyse data shows are increasingly concentrated in the sub-£200,000 price band outside London and the South East — the message is nuanced. Gross yields in the North and Midlands remain attractive, typically in the 5–8% range depending on property type and location. But leverage is more expensive, regulation is more demanding, and the era of depending on annual rent hikes to compensate for rising costs is, at least for now, over.

The rental market has not broken. But it has, quietly and for the first time in nearly a decade, paused.