Rental growth in the UK is expected to settle back into something resembling its pre pandemic rhythm over the next couple of years as the surge in tenant demand finally eases. Savills anticipates that rents will rise by around 12 percent over the next five years, a shift that reflects not only improving supply dynamics but also a return to more predictable market behaviour after an unusually turbulent period.

For much of the past decade, rental growth has tended to move in step with income growth. That relationship broke down sharply in the aftermath of the pandemic. Growth peaked at around 12 percent in the year to August 2022, far above anything implied by earnings, and renters felt the strain. By 2025, the average household was spending 32.4 percent of gross income on rent, up from 30.4 percent five years earlier. It was the steepest deterioration in rental affordability since at least the mid 2000s, and arguably since the early 1990s.

The story behind this divergence is fairly straightforward. Supply has been tightening steadily since 2017, as tax reforms, higher borrowing costs and anticipated regulatory changes pushed some landlords out of the market. Build to Rent has grown, but not fast enough to offset the loss. The sector has been averaging about 15,000 completions a year, set against roughly 4.9 million private rented households nationwide. At the same time, demand intensified to unprecedented levels. A post lockdown surge in household formation combined with sharply higher net migration, adding around 600,000 extra households over five years. That influx alone amounted to a 10 percent rise in demand for rental homes within just two years.

Against such a backdrop, the run up in rents was almost inevitable. Now, however, conditions are beginning to shift. First time buyer numbers have been elevated in 2025 as lending rules have loosened, easing pressure on the rental sector by helping more households move into ownership. Net migration has also moderated. HomeLet data suggests that rent as a proportion of income has already dipped from 33.4 percent in late 2023 to 32.4 percent by the third quarter of 2025, hinting that affordability is edging back towards its long term trend.

Savills expects this recalibration to continue. Their modelling suggests rental growth will sit somewhere between CPI inflation and household income growth over the coming five years. If that proves correct, the sector will finally regain the stability that characterised much of the 2010s, when rents tracked economic fundamentals more closely and sudden spikes were uncommon.

The biggest risks sit, as ever, on both the supply and demand sides. A fresh surge in net migration could reheat competition for homes, while any major shock to landlord participation could constrict supply further. So far, the outflow of landlords has been gradual rather than dramatic. But with the Renters’ Rights Act now on the statute book, the balance between regulatory protection and landlord viability will be critical. If profitability erodes too far, investment could retreat to a degree that triggers a supply crunch to rival the demand shock that made renting so difficult in recent years.

‍