The supply of rental homes in the UK has declined for the first time in four years, contributing to a rise in average rents to record levels, according to recent data from the property website Rightmove. Nationally, the average monthly rent outside London increased by 2.3 percent over the past year to £1,397, while rents in London rose 2.9 percent to an average of £2,791 per month.

Rightmove linked the increase in rental prices to a year-on-year 1 percent decrease in the number of available rental properties, marking the first drop in rental supply since 2022. The decline was primarily driven by fewer new listings rather than an acceleration in lettings, with the most significant reduction in supply observed in London during the spring and early summer months.

This shift reverses a longer-term trend that saw a steady rise in new rental homes coming to market following a persistent shortage during the pandemic. The rental landscape is also influenced by recently introduced legislation, notably the Renters’ Rights Act, which came into force in May and offers tenants stronger protections.

The estate agency Connells reported that landlords have been increasing their acquisitions of rental properties relative to sales, suggesting a growing investor interest in the market.

Colleen Babcock, head of partner marketing at Rightmove, noted that the rental market is more balanced now compared to the immediate post-pandemic period, when a surge in net immigration combined with limited supply pushed rents sharply higher. Since the pandemic began, average rents in the UK have risen by nearly 50 percent.

Despite some easing, competition for rental homes remains intense. Letting agents currently receive about ten inquiries per available property, a slight drop from 11 a year ago but still double pre-pandemic levels when properties typically attracted five inquiries. The most acute imbalance between supply and demand is found in the North West, where there are 14 prospective tenants for each rental home.

Regional rental growth has been strongest in the North West and North East, with increases of 4.1 percent over the past year, while the East Midlands and East of England have experienced more modest rises in the range of 1.5 percent annually.