Greater London remains the UK’s most expensive rental market, with average rents now at £2,238 – 1.4% higher than last month and 5.1% up on a year ago.

Across the UK, most regions recorded further rises in August, with 10 out of 12 posting month-on-month growth.

Affordability is also being stretched, with tenants now spending an average of 32% of their income on rent, rising to 39.8% for those living in London.

Key Data from the August 2026 HomeLet Rental Index

• Average UK rent: £1,382 (+0.9% MoM, +4.1% YoY);

• UK excluding Greater London: £1,179 (+0.8% MoM, +3.4% YoY);

• Greater London: £2,238 (+1.4% MoM, +5.1% YoY).

Largest monthly changes:

• Northern Ireland: +2.4%

• South West: +2.3%

• Greater London: +1.4%

Strongest annual increases:

• South West: +5.2% YoY

• Greater London: +5.1% YoY

• Northern Ireland: +4.9% YoY

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Second, there is the latest Zoopla Rental Market Report.

This suggests increased demand for rental homes over recent months, while the supply of homes coming onto the rental market has been trending lower than last year in recent months, down 6% in August.

The number of homes available for rent started to fall in May 2026, ending a three-year recovery in rental supply which helped reduce the level of rent rises over the last two years.

There are now 3% fewer homes for rent across the UK than a year ago. There are wide regional variations but areas with the biggest declines in homes for rent are typically those registering faster rental growth than last year.

Demand for rented homes typically increases between July and September, but the rise in mortgage rates since the start of the year has added to renter demand, particularly in London.

The combined impact of rising demand and falling supply means the number of enquiries per UK rental listing is six per cent higher than a year ago.

Enquiries have risen to 5.3 per listing, the highest level for almost two years (22 months) as competition starts to increase once again.

UK rents have risen 2.6% over the past year, up from a low of 1.6% growth in February 2026. The average rent now stands at £1,340 a month. With mortgage rates remaining elevated, and new investment in rental stock by landlords still muted as a result of higher costs and more regulation, rents are expected to keep climbing over the coming months, with growth set to hit between four and five per cent by the year end.

Looking across the country, Zoopla’s data reveals that rents are typically rising fastest where the number of homes available to rent has declined the most. Growing scarcity of homes for renters is resulting in higher rents rather than a big increase in demand. London is the outlier where rental supply and demand are tightening at the same time.

All regions and countries of the UK are registering positive rental inflation in July 2026 and five areas have seen an increase in the pace of rental growth over the past year, the others have seen a moderation in growth.

London and the Yorkshire and Humberside regions have seen the biggest increase in rental growth over the last year, with both areas recording an above average drop in the number of homes for rent, down 6% and 12% respectively.

In contrast, Wales has seen the sharpest slowdown in rental growth due to a 7% increase in the number of homes for rent, boosting choice for renters.

These trends in rents reflect the interaction of supply and demand across local markets.

The portal says its data suggests that higher rental inflation is not down to the Renters Rights Act in England as Scotland is experiencing the same trends of fewer homes for rent and higher rental inflation.

Rental growth has jumped in London to 2.9%, up from 1.7% a year ago on reduced supply and rising demand.

The impact of higher mortgage rates has hit home buyers in London much harder than the rest of the country with Zoopla data showing that the average London buyer needs to find an extra £35,500 for their deposit to offset the higher mortgage rates introduced this year, nearly double the £18,200 needed nationally.

This has driven a much stronger pick up in demand for rented homes compared to the rest of the country, where the cost of higher mortgage rates on buyers is less severe.

The impact is most pronounced across the inner areas of London where house prices are highest and many renters want to live (SE, E, N, NW, SW, W, EC and WC postal areas).

Across these areas, demand is higher than last year while the number of homes for rent is 13 per cent lower, creating scarcity and pushing rental growth up to between three and four per cent.

The two-speed market that has defined the rental sector since 2022 remains firmly in place.

Areas with average rents below £750pcm are seeing growth roughly double that of the national rate, 5.4%, against 2.6% nationally.

Rents are also rising faster in the highest value areas due to the trends in London.

In less expensive areas, renters have more capacity to absorb rent rises before hitting an affordability ceiling, whereas in the most expensive areas, rents are already stretching what renters can pay, capping how much further rents can increase.

Tags: Housing Shortage & Affordability, Lettings Market, Rental Reform, Uk Property Market Analysis

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