There were 17% fewer tenants registering in lettings branches across Great Britain in May 2025 compared to a year earlier, with numbers now running 28% below 2019 levels, according to the Hamptons Monthly Lettings Index.

So far in 2025 there has been an average of 1.5 tenants registering to find somewhere to rent for each prospective first-time buyer, nearly half from when mortgage rates peaked in 2022 and 2023. With both London and Scotland seeing more first-time buyers looking to buy than tenants looking to rent, for the first time on 10 years.

Aneisha Beveridge, Head of Research at Hamptons, said: “In a similar trend to the years following the last economic downturn, falling interest rates have reduced the pace of rental growth. Landlords rolling off short-term fixed-rate mortgages are now seeing their monthly payments fall, reducing the need to pass on further costs to tenants.

“At the same time, lower mortgage rates are changing the arithmetic for tenants who are thinking about buying. While rates remain high relative to pre-Covid times, three years of above-inflation rental growth mean that for most, buying remains cheaper than renting. This has boosted first-time buyer numbers and reduced demand in the rental sector.”

Weaker tenant demand has reduced rental growth, with the average rent on a newly let property in Great Britain rising 1.5% in the 12 months up to May 2025. In May 2024, average rents were increasing by 5.1% annually. Demand in the rental sector is cooling as more tenants become homeowners.

Beveridge adds: “It has taken the best part of two years for the pace of rental growth to fall from double digits down to 1.5%. This means that rents are now rising at a rate that’s close to their long-term average, and suggests that the era of rapid rental growth is behind us for now.

“That said, rental growth is unlikely to cool much further. While falling interest rates should take the sting out of rental growth over the next few years, landlords will likely continue to price in political risk. Landlords are increasingly getting their heads around what the Renters’ Rights Bill will mean for them, but the way it plays out for landlords in reality will shape future investor appetite.”

In the capital, first-time buyers have accounted for 50.3% of new buyer registrations so far in 2025, with numbers up 2% year-on-year, despite a fall in demand from other buyers.

At the end of May, there were 5% more homes on the rental market than at the end of May 2024. The number of homes available to rent has increased annually in every month since August 2022, despite a decline in new buy-to-let purchases. The increase in supply reflects how homes are taking a little longer to let, due to weaker demand. However, in recent months, the size of increases has dropped back to low single digits.