In this article, we will look at the current and forecast rental property market trends for 2025, including performance in the North East and North West, and a comparative examination of these regions and the rest of the UK. We will look at the implications for existing landlords and the impact that these trends may have on their investments. At the foot of this blog, we have included the sources for our statistics for further research and development purposes.
Economic Context
The UK rental property market in 2025 is being shaped by multiple economic factors. Inflation unexpectedly rose to 3% in January 2025, driven by rising transport and food costs, as well as changes in Government policy such as new VAT charges on private school fees (The Guardian, 2025a). This inflationary pressure has put at risk the likelihood of an interest rate cut in the near future, although we believe that the Bank of England Rate will remain at least stable.
Rental Property Market Price Trends (12 months to January 2025)
Recent data from the Office for National Statistics (ONS) indicates that private rental prices in the UK increased by 9.0% in the 12 months to December 2024, slightly down from the peak of 9.2% in March 2024 (ONS, 2025a). Over the past year, rents have increased by 3.9%, bringing the average monthly rent to £1,270 (The Guardian, 2024). Regional variations exist, with Northern Ireland experiencing a 10.5% rise, while London saw only a 1.2% increase (ONS, 2025a).
Forecasts for 2025 predict that advertised rents will increase by approximately 3% both inside and outside London (Rightmove, 2024). A shift in supply and demand is contributing to this slower growth, with a 19% drop in renters looking to move and a 7% increase in available rental properties compared to last year (Rightmove, 2024).
Supply and Demand Dynamics
Despite an increase in rental property supply, the rental property market remains imbalanced. The number of available rental properties has risen by 13% compared to the same period last year, easing rental price increases (Fine & Country, 2024). However, tenant demand has dropped by 16%, suggesting that affordability concerns are preventing more renters from moving (Fine & Country, 2024).
House prices have also seen moderate growth, with the average UK house price rising by 3.3% to £290,000 in the 12 months to November 2024, marking an increase from the 3.0% annual growth recorded in October 2024 (ONS, 2025b). This increase in house prices, combined with rising mortgage rates, continues to drive demand for rental properties.
Affordability Concerns (5 years to January 2025)
Affordability remains one of the biggest issues in the rental market. Over the past five years, rents have increased by 40%, while wages have only risen by 28%, creating an “affordability ceiling” (Rightmove, 2024). As a result, 26% of rental properties have had their asking rent reduced, up from 23% in the previous year (Rightmove, 2024).
London has been particularly affected, with rental costs rising by 11% annually up to January 2025, outpacing the national average increase of 8.7% (Financial Times, 2025).
This trend highlights the increasing pressure on renters, especially in high-demand urban areas.
Regional Variations: The North East and North West
The rental markets in the North East and North West of England have shown noteworthy growth, reflecting broader national trends while also showcasing robust regional performance.
Nationally, the UK rental property market has been characterised by rising rents, with an average increase of 9.0% in the 12 months leading up to December 2024 (ONS, 2025a). While regions like London have historically commanded higher rental prices, recent trends indicate a narrowing gap between the North and South.
The average rent difference has decreased to the smallest level in at least 11 years, with northern rents at £960 per month (a 9.6% increase from last year) and southern rents at £1,317 (The Guardian, 2024). This shift suggests that rental growth in the North East and North West is outpacing that of other regions, driven by factors such as affordability, increased demand, and regional economic developments.
- North East England
In the North East, rental prices have experienced significant increases. As of December 2024, the region saw an annual rental growth rate of 8.7%, positioning it among the areas with the fastest-rising rents in the UK (Zoopla, 2024).
This surge is particularly noteworthy given that the North East traditionally has some of the lowest average rents in the country. The heightened demand in this region is contributing to the upward pressure on rental prices.
- North West England
The North West has also experienced robust rental growth. In towns such as Birkenhead, rental prices increased by 16.1% over the past year, with average rents now approximately £737 per month (Farrell Heyworth, 2024).
This trend aligns with broader forecasts predicting that the North West will see a nearly 30% growth in rental values over the next five years, the strongest among UK regions (Savills, 2024).
Implications for Landlords: Rental Yield and Property Values
For landlords, the evolving rental landscape presents both opportunities and challenges. The increase in rental prices, particularly in the North East and North West, suggests that landlords in these regions may experience higher rental yields compared to previous years. In areas like Birkenhead, where rents have risen by 16.1% annually, landlords can achieve strong returns relative to property values, which remain lower than in the South (Farrell Heyworth, 2024).
However, affordability constraints pose risks, as landlords may need to adjust rental expectations to accommodate tenant budgets. Nationally, rental yields have stabilised at around 5.3%, with some northern cities exceeding 6.5% due to lower property purchase costs and rising demand (Zoopla, 2024).
Meanwhile, property values continue to rise, with UK house prices increasing by 3.3% annually as of late 2024 (ONS, 2025b). This capital appreciation benefits landlords looking for long-term investment growth. However, impending regulatory changes, such as the Renters’ Reform Bill, may impact profitability by increasing compliance costs and restricting the ease of repossession (Progressive Lets, 2024).
As a result, landlords must carefully navigate rental pricing, yield calculations, and legislative shifts to maximise returns while maintaining occupancy levels.
And finally…
The UK rental property market in 2025 is expected to experience moderate growth, shaped by inflationary pressures, supply and demand changes, affordability challenges, and new regulations. Landlords and tenants alike will need to navigate these shifting dynamics to make informed decisions.
Bibliography
For property portfolio professionals we have included the sources for our figures and research for further reading below
