James Bovey, Head Of Property Finding
Stabilisation Amidst Reform
The UK rental market plays a vital role in housing people who either can’t afford or choose not to buy their own home – or, like our clients, find themselves in urgent need of a living solution. As a result, we do a significant volume of work across the UK rental market. Our clients often experience a catastrophic injury that leaves them in a living situation wholly unsuited to their circumstances. The imperative for us is to organise accommodation as quickly as possible so they can begin their rehabilitation journey. Rentals play a key role in that process.
So, what’s been happening this year? It’s fair to say that the UK rental market in 2025 so far has been characterised by a delicate balance between slowing rent inflation, ongoing affordability challenges and major regulatory changes. As we move further into summer, both tenants and landlords are navigating an evolving landscape shaped by economic conditions and legislative reform.
Rent Inflation Eases but Affordability Remains a Concern
- Overall, rent inflation in the first half of 2025 has decelerated. It stands at 3% as we write this, down from 7.4% a year ago, easing the surge in UK rental prices witnessed over the past four years.
- However, affordability remains a pressing issue. The average annual cost of renting is now £15,400, an increase of £3,000 over the past three years.
- The regional picture reveals some underlying differences. In London, rental inflation is at its lowest, just 1.1%, but in regions such as the North East and West Midlands, inflationary pressure remains, with increases of 9% and 6% respectively so far this year.
Supply and Demand: Is the Imbalance Narrowing?
Various sources suggest the rental market is seeing a modest improvement in the supply-demand balance, although this may not be immediately apparent. The number of homes available for rent has increased by 11% year on year, yet availability is still around 18% below pre-pandemic levels, indicating a gradual recovery but not a return to historical norms.
Despite the increase in supply, demand remains high, with approximately 12 renters competing for each available property – double the pre-pandemic level. This makes our approach to building relationships with estate agents and landlords as important as ever, ensuring our clients have a voice at the front of the rental queue.
Legislative Changes: The Renters’ Rights Bill
The Renters’ Rights Bill, introduced by the Labour government in 2024, is set to bring substantial reforms to the rental sector. It builds on the previously shelved Renters Reform Bill, with key provisions including the abolition of Section 21 ‘no-fault’ evictions, the introduction of open-ended tenancies and regulations to prevent unjustified rent increases. These changes aim to enhance tenant protections, but will require landlords to adapt their practices accordingly.
Pressures on Landlords
Despite the increase in homes available to rent in 2025, the impact of legislation is something we’re watching closely. Rising costs, regulatory changes and shifting market dynamics have led some surveys to suggest that up to 24% of landlords are planning to sell all their properties within the next two years. Reasons for selling include increased tax burdens, such as the reduction in mortgage interest relief and higher Capital Gains Tax (CGT) rates, making property investment less profitable.
Legislatively, we sense that increased protection for renters, coupled with incremental costs for landlords, could result in more landlords exiting the market. This could, in turn, lead to a tighter rental market, fewer properties available to tenants, rising rents and increased competition among prospective tenants. In discussions with estate agents, we’re seeing that in some areas nearly one in four homes listed for sale were previously rental properties. Whether this on-the-ground data will be reflected in the macro statistics later in the year remains to be seen.
There is strong evidence to support the view that landlords who remain in the market will increase rents further to offset their rising costs. This is speculative, of course. The Renters’ Rights Bill is currently going through the House of Lords, so its full impact will likely not be known until it is finalised and passed. We’ll expand on some of the concerns we have in our next post.
Outlook for the Remainder of 2025
The rental market in 2025 is experiencing a gradual improvement in supply, but challenges persist. While the increase in available properties is a positive development, it remains insufficient to fully meet demand, especially in certain regions. Affordability continues to be a significant concern for renters, and the market is expected to remain finely balanced between supply and demand pressures.
In summary, while there are more rental properties available in 2025 compared to 2024, the increase is modest and the market remains competitive, with ongoing affordability challenges.
James Bovey
PLG Consultants, 13th June 2025
We are a leading firm of disability property finders and architects, working nationwide across the UK. We specialise in the provision of quality, accessible housing solutions for individuals with disabilities resulting from personal injury and medical negligence.
We serve families, litigation solicitors, deputies, case managers, occupational therapists and care teams to develop a clear understanding of an individual’s unique needs.
Our expertise lies in then finding, adapting and transforming properties into homes tailored to accommodate each client, whether temporary or permanent, and delivered with meticulous attention to detail and the utmost care.
