The UK’s rental market is showing unmistakable signs of strain, with new data revealing a slowdown in rent growth but a simultaneous squeeze on housing supply—especially in shared accommodation. According to the latest figures from the Office for National Statistics (ONS), average monthly rents across the UK grew by 5.7% to £1,348 in the 12 months leading up to August 2025. While this represents a slight dip from the 5.9% annual growth recorded in July, it’s still a figure that would have seemed eye-watering just a few years ago.
Breaking down the numbers, England’s average monthly rent hit £1,403, up 5.8% year-on-year. Tenants in Wales faced the steepest increase, with the average rent soaring by 7.8% to £811. Scotland reported a more modest 3.5% rise to £1,002, and in Northern Ireland, the average stood at £860 in June—an annual growth of 7.2%. Within England, regional variations were striking: the North East saw the sharpest inflation at 9.2%, while Yorkshire and the Humber experienced the smallest change at 3.4%.
Property type also played a role in rental costs. Detached homes commanded the highest average rent at £1,536, while flats and maisonettes were the lowest at £1,321. Larger homes with four or more bedrooms averaged £2,010 a month, compared to just £1,094 for one-bedroom properties, according to the ONS.
Meanwhile, house prices are also on the rise—albeit at a slower pace. The ONS reported that UK house prices increased by 2.8% to £270,000 in the year to July 2025, a slowdown from 3.6% in June. England’s average house price now stands at £292,000, up 2.7%. Wales saw prices climb by 2% to £209,000, Scotland’s by 3.3% to £192,000, and Northern Ireland’s by 5.5% to £185,000 in the second quarter of 2025.
Industry voices are quick to point out that, while the rental market is cooling off from pandemic highs, it remains challenging for both tenants and landlords. Tom Bill, head of UK residential research at Knight Frank, told the press, “Rental values are coming down from the highs of the pandemic but are still elevated by historical standards. More landlords are exploring a sale due to changes including the looming Renters’ Rights Bill, which should push rents higher by reducing supply.” He added, “Landlords have been the subject of a succession of tax and legal changes in recent years so it’s not difficult to imagine how they felt about the recent speculation the government could charge National Insurance on rental income. For some it could be a disincentive too far, while others could pass the cost on in other ways. Either way, it could end up hurting tenants.”
The pressure on tenants is evident. Russell Anderson, commercial director of mortgages at Paragon Bank, explained, “Historically, rent inflation has broadly correlated with wage inflation. The mismatch between the supply of and demand for privately rented homes in recent years has seen rents outpace wages, placing financial pressure on tenants. Positively, buy to let mortgages rates have lowered more recently, which should help improve affordability and, ultimately, supply.”
But the story isn’t just about rising costs—it’s also about dwindling options. Recent research by property platform COHO reveals that house share availability in Houses in Multiple Occupation (HMOs) across England has plummeted by 15.2% between June and September 2025. In some cities, the drop is even more dramatic: Bradford saw a staggering 59.1% reduction in available house shares, Leeds 55.4%, Manchester 33.3%, Brighton 32.9%, Leicester 24.6%, Nottingham 23.7%, and Sheffield 21%. The only major city to buck the trend was London, where house share stock actually increased by 4.7% in the same period.
Despite these sharp declines in supply, tenant demand for house shares in England grew by just 3.3% between June and September, according to COHO. The data paints a complex picture. In Bradford, demand rose by 14.3% even as supply fell by nearly 60%. In Leeds, demand actually dropped by 1.1% despite the 55.4% decrease in availability. Sheffield saw both a 21% drop in stock and a 3.7% fall in demand. COHO suggests that the annual influx of university students snapping up last-minute house shares for the academic year partly explains the decline in availability, especially in university-heavy cities. However, this doesn’t fully account for the simultaneous fall in both supply and demand across most cities.
The more troubling explanation, according to COHO’s spokesperson, is that HMO landlords are starting to exit the sector. “Any data that points towards a declining supply of shared houses should be a real cause for concern on Downing Street. The HMO sector is a vital tool in the nation’s battle against the housing drought, but the sector is facing hard battles from two fronts,” the spokesperson said. “First there’s the fact that the entire sector is being unfairly maligned on the Right of the political spectrum, placed at the centre of some kind of batty migrant conspiracy theory. We already know that this is causing planning councils to shy away from approving new shared living schemes, but is it now also causing HMO landlords to cut their losses and sell up?”
The spokesperson continued, “Secondly, the incoming Renters’ Rights Bill looks like it is going to given the green light, full steam ahead, without proper consideration given to the ways in which it disincentives landlords, again causing many to leave the rental sector. Then we’ve got Labour’s proposal of taxing rental income. This in particular is going to be a huge blow to HMO landlords whose rental income per property tends to be greater than your standard buy to let. We can’t be surprised now if swathes of HMO landlords decide that enough is enough and leave the sector altogether. If this is indeed happening, there’s no prize for guessing what comes next. Further rental supply shortages which in turn means a massive hike in rent prices. Everybody loses.”
Richard Donnell, executive director at Zoopla, echoed the sentiment that the market is at a crossroads. “Rents and house prices are slowing across the UK as housing demand cools and affordability pressures bite on what people can pay for rent and mortgages. This has big implications for home building where weaker demand is holding back investment in growing supply. The government needs to either support demand or remove the impediments to getting more home built.”
Nathan Emerson, chief executive of Propertymark, pointed to the ongoing legislative changes in Scotland and England as a source of uncertainty. “Now that politicians throughout the UK have returned from the summer recess, both the Scottish Parliament and Westminster will progress the Housing (Scotland) Bill and the Renters’ Rights Bill respectively. While both pieces of legislation represent fundamental changes to the rental markets of Scotland and England, the ongoing process of fine-tuning new legislation has the potential to create an environment of uncertainty for many landlords and renters. Demand is still outstripping supply considerably, which is why we cannot afford to see investors consider selling up and causing any further reduction in the supply of rental properties. With a population expected to exceed 70 million people by the end of the decade, there needs to be provision to enhance the flow of sustainable properties of all types and tenures into the system, backed up by data-driven insight and supporting infrastructure on a regional basis.”
As the UK’s housing market faces legislative shifts, supply shortages, and persistent affordability concerns, both renters and landlords are left in a state of uncertainty—one that could have lasting consequences if not addressed with care and foresight.
