Struggling with higher rental prices or thinking of leaving the private rental market? In May 2025, tenant demand in areas like West Midlands and Coventry dropped, as more tenants considered buying their own homes.
This blog explores how recent housing market changes can help you decide whether renting or buying makes sense for you right now. Keep reading to learn what’s next for rents and property prices this year!
The May 2025 Lettings Index shows signs of a cooling rental market across the UK. Interest rate drops have sparked a shift, with more renters now looking to buy their first homes.
Cooling demand in the rental sector
Rental demand took a noticeable dip this May… our latest Lettings Index clearly shows this shift. Tenants are now turning to buying homes instead. We’ve seen tenant sign-ups drop by 17% at lettings branches across Great Britain compared to last year.
This downturn signals a key turning point, especially after years of steep rental prices. Many renters now feel buying offers better value, helped along by recent drops in interest rates.
Landlords face fresh challenges too—empty properties stay vacant longer, prompting some to cut rents to win tenants back.
Decrease in tenant registrations
The latest figures clearly show a slowdown in the cooling rental market. In May 2025 alone, 63% of lettings offices reported fewer new tenants signing up. And that’s no random dip—it’s been going steadily downward every month for a full year now.
Compared to the same months in the previous year, tenant sign-ups continue to shrink.
Across the UK, letting agents say their offices feel quieter and their phones ring less. The pattern hints at a genuine shift in attitudes about renting versus owning property. People who previously felt stuck renting now feel open to other choices.
So landlords face a tougher job attracting quality tenants in this quieter environment.
Impact of falling interest rates on rental growth
Interest rates in the UK have started dropping, slowing down rent increases across the country. It’s a similar pattern we’ve noticed before, following past economic slumps. Landlords finishing short-term fixed-rate mortgages now pay less each month, meaning they’re less likely to push rents up.
In fact, many property owners can now earn steady profits without increasing rents at all.
For renters, that’s really good news—especially after the sharp hikes last year. Lower mortgage bills mean landlords aren’t under as much pressure. In some places, rental growth for new agreements has dipped to around 1.5%, way below those higher peaks earlier in 2023.
It looks like the rental market is settling down again, as financial pressure on property owners finally eases off.
Transition to Homeownership
The housing market shift has opened doors for renters to step onto the property ladder. Lower interest rates now make buying a home cheaper than renting in many areas.
Incentives for tenants to consider purchasing homes
Lower mortgage rates are making home buying attractive to many renters these days. After three years of rents rising faster than inflation, home ownership suddenly looks like the smarter move.
In lots of places, monthly mortgage payments now actually cost less than renting—so it just makes sense to browse property listings instead of rental ads. Plus, schemes for first-time buyers give an extra push, making it easier to afford a place of your own.
Recent tax rule changes pushed many landlords to sell up, cutting down on available rental flats and houses. Fewer properties to rent mean higher monthly rents, making buying even more appealing.
At the same time, lenders are rolling out new deals to help tenants who have a good record of paying rent, but only small savings for their deposit. All these changes together offer tenants a real chance to finally own a home.
Decrease in rental demand due to cost-effectiveness of buying
The rental market across the UK is easing off—as more tenants shift into buying their own homes. Right now, first-time buyers with savings equal to at least 10% of a property’s price often find owning cheaper than renting.
Mortgage payments each month are usually lower than renting similar homes. The maths just makes sense for many renters today.
Housing affordability has clearly improved, at least for those who’ve managed to save enough for a deposit. Estate agents say they now often hear renters ask about mortgages and home-buying options.
Tenants are realising their monthly housing costs could help build their own home’s value rather than go straight into a landlord’s pocket. This shift is changing rental demand and prices in most areas, though each local market shows its own unique results.
Regional Variations in Rental Trends
The rental market shows big shifts across UK regions this month. Cities in the North now see more demand while posh London areas cool off fast.
Affluent areas experiencing greater decline in tenant demand
Right now, wealthy neighbourhoods face a big slide in rental interest. Our latest data shows tenant demand down around 50% in posh areas, compared to less pricey zones. It’s quite a shift for Britain’s property rental market.
Fancy flats and houses in upscale spots often sit empty these days—as renters hunt out better value elsewhere.
Money has a lot to do with it. Many people who rented in rich areas before now prefer to buy homes instead. Lower interest rates make buying more appealing than paying sky-high rents in places like Kensington or Chelsea.
Estate agents there even say weekly calls for rental properties have dropped noticeably. Landlords may need to lower rent prices, or perhaps offer nicer extras, to tempt new tenants through the door.
Shift in ratio of tenants to first-time buyers
Tenant demand is falling fastest in wealthier areas—but it’s happening everywhere, across the entire rental market. One big change is clear—the ratio of tenants to first-time homebuyers.
Back in 2017, for each person hoping to buy their first home, there were almost six tenants trying to find rentals. Fast forward to early 2025, and this ratio has dropped drastically—just 1.5 tenants now per first-time buyer.
Clearly, renters are shifting into homeownership in large numbers.
Several reasons are driving this shift. For starters, interest rates have fallen, making buying easier and cheaper than it used to be. Many tenants now find mortgage repayments either about the same as their monthly rent—or even slightly lower.
On top of this, lots of people have put away extra savings over recent years as the economy steadily improved. All this adds up to a quieter rental market, as more people decide to own their home instead of renting.
Rental Stock and Growth Rates
The rental market is seeing a rise in stock levels as more landlords list their properties. Growth rates for new buy-to-let purchases have slowed down, with fewer investors adding to their portfolios.
Increase in rental stock
Homes available to rent rose by 5% in May 2025 compared to the previous year. This continues a steady increase that first kicked off in August 2022. With more homes hitting the market, tenants now have plenty of options to pick from—which is good news if you’re hunting for a new place.
A growing supply of rentals also means landlords may need to sweeten their deals to attract tenants. Renters can afford to browse around, take their time, and pick places offering the best value.
For property investors, this means stepping up their game—whether through nicer presentation, competitive prices, or extra perks—to draw attention in this busier market.
Decline in growth of new buy-to-let acquisitions
Buy-to-let property purchases have recently slowed across the UK. Landlords now face rising expenses and new tax rules, making things trickier. Although rental stock levels have risen, fewer people invest in properties to let.
It takes landlords a bit longer to find tenants these days—as renter demand starts to cool off. Lots of landlords delay their investment decisions because the market feels uncertain.
So, the rental sector is changing shape… more homes are now up for rent, yet fewer new landlords are stepping into the market.
Average Rent and Renewal Rates
Rent rates are climbing, but at a slower pace than last year. Tenants who stay put face steeper hikes than those moving to new places.
1.5% increase in average rent for newly let properties
The average monthly cost of newly let homes now sits at around £1,366—a rise of just 1.5% from last year. That’s quite a drop from May 2024, when prices shot up sharply by 5.1%.
So, rental growth has slowed down by nearly two-thirds compared to the previous year. It seems cooling demand in the rental market is behind this gentler price climb. Landlords are dealing with shifting conditions as fewer tenants register interest, and growing numbers think about buying property instead.
Renewing tenants experiencing higher rent increases
Tenants staying in their current homes often get hit with bigger rent hikes than those who move around. For twenty months straight, renewals saw higher rate rises compared to new lettings.
People staying put faced average increases of 3.7%, pushing monthly rent up to around £1,267. Landlords may charge loyal renters more, betting tenants would rather avoid the bother and cost of moving.
Today, renewing a lease usually costs more than renting somewhere else nearby.
Keeping loyal tenants now carries rent increases that rise faster than general market rents. Many renters feel trapped—either swallow higher charges or face the expense and stress of finding another place.
This tricky situation makes some tenants choose moving out instead of taking on an even higher rent. Such monthly increases put extra pressure on tenants’ finances, especially with today’s high cost of living.
Property managers often point towards current rental market patterns as reasons behind these steady rises.
Regional Rental Growth
Regional rental growth shows stark differences across the UK. The North and Midlands lead with the highest increases, while London sees a drop in its growth rates.
Highest rental growth in the North and the Midlands
The North and Midlands now top the UK for rental price growth among new tenants. Quite the change—London usually led on rent hikes in recent years. Several factors feed this shift, like improved transport connections and a steady rise in jobs up north.
Cities such as Manchester, Leeds, and Birmingham draw renters and investors alike, thanks to affordable prices and expanding job markets.
Rentals in these regions give tenants more space at better value compared to the crowded South. Landlords benefit too, often seeing greater returns on investments. The rent gap between North and South continues to narrow as northern areas pick up pace.
With more people and companies eyeing locations outside London, this trend may well carry on.
Drop in rental growth rates in London
London’s rental market is dipping slightly—down 0.5% from last year. That small decrease means rents in the capital are now below what they were in June 2023. It’s quite a contrast to rental growth elsewhere, especially across the North and Midlands, which are still seeing strong demand.
This cooling off in London’s rental prices shows property markets around the UK don’t move together. Tenant demand is changing—more renters are now considering homes outside London.
Renting in the capital has always been pricey, so this small downturn might actually ease things a bit for tenants.
Property experts point to remote working as one reason behind the shift. Paired with more affordable housing available in other regions, many renters see good reasons to head away from the city.
It’s a mix of cost, flexibility, and lifestyle that’s reshaping London’s property market right now.
Final thoughts
The rental market is definitely cooling off—more tenants are now thinking of buying homes instead. Interest rates have dropped, making homeownership cheaper than renting for lots of people.
This shift is strongest in wealthier areas, where tenant demand is down by around 50%. Rental growth for new lettings has slowed right down to about 1.5%. In London, rents have even dipped slightly.
It’s a big shift in housing, moving the advantage away from landlords and more in favour of first-time buyers, for now.
If you want to speak to an expert contact the leading estate agents in Coventry today and find out more about either sales or letting.
