Newly agreed rents in Great Britain fell by 0.4% year-on-year in August 2025 to £1,387 pcm according to Hamptons.

Although rental growth has underperformed inflation for the last nine consecutive months, rents have risen faster than inflation over both five and ten years, up 31% vs 24.9% CPI over five years, and 41% vs 33.7% CPI over ten.

Aneisha Beveridge, Head of Research at Hamptons, said: “For most of the last five years, rapidly rising rents were a key contributor to the UK’s high inflation story. But after several years of rapid rental growth, the tide is finally turning. For the ninth month in a row, rents have risen more slowly than inflation—offering tenants a rare moment of financial respite. While the monthly savings may seem modest, they mark a significant shift in the rental market’s role in driving inflation.

“Over the longer term, rents have consistently outpaced inflation, which means tenants today are paying more than they would have if rents had simply tracked CPI. For the most part, this has mirrored the rising cost pressures facing landlords. But this recent slowdown suggests the market is recalibrating. With affordability stretched and demand softening, landlords are having to adjust to attract tenants.”

Rents have fallen in four of the 11 regions of Great Britain with London, where rents have been decreasing on an annual basis in each of the last eight months, recorded the largest fall of 3.3%. Inner London rents fell by 5.8% over the last 12 months, marking the largest decline since May 2021. Here, rents stand £179 per month below their October 2024 peak and 1.3% below where they were two years ago.

Yorkshire & Humber (-0.5%) and the North East (-0.2%) also saw annual declines for the first time since November 2019 and February 2020 respectively. Rental growth in other regions remained in positive territory, despite the rate of growth slowing.

Beveridge said: “Like wages, rents don’t often fall. In fact, there have only been six months over the last 14 years when rents have fallen nationally on an annual basis. And when they do, it’s usually in real terms, rather than absolute terms. What we’re seeing now is a real terms fall in rents – when inflation and wages outpace rental growth - which leaves tenants feeling better off. It’s a sign that the rental market is responding to wider economic pressures, and it could help ease the inflation headache for policymakers in the months ahead.”