Zoopla says there will be no significant change in the rental supply next year – and every region save the East Midlands now has fewer homes to rent than at the pandemic.

The portal’s latest market snapshot says landlords continue to sell off rented homes “at a steady pace” in the face of greater regulation and higher borrowing costs, despite what have been sizable increases in rents. 

Despite this, Zoopla believes that the peak of the private landlord sell-off has now passed. It’s now a question of when market conditions look right for landlords to increase investment and expand rental supply. 

This is still some way off and requires lower base rates and higher rental yields, Zoopla claims.

It says the one bright spot has been more corporate investment in Build To Rent homes – but even in these instances, the pace of new development has slowed in the face of higher borrowing costs and more regulation. 

Zoopla expects a continued mismatch between supply and demand with average rents for new lets to increase by four per cent over 2025 taking the annual rental cost to £15,850. 

Rental growth in London and larger cities will lag behind the UK average as a result of growing affordability pressures and further modest growth in supply. 

It adds that on average, rents for newly let properties are now 3.9% higher than a year ago but with pockets of fast-rising rents remaining. Annual rental inflation stood at 10.5% in Northern Ireland compared with 1.3% in London.

In towns and cities, average rents are rising fastest in Rochdale (up 11.9% in a year) and Blackburn (up 10%), and Birkenhead (up 9%). Zoopla says renters are seeking areas in and around major cities.