Tenants brace for steeper rent hikes as the market picks up speed

If you’ve been watching your monthly outgoings, you’ll have noticed the rental market tightening its grip. Zoopla’s latest figures show that the average price for a new tenancy rose by 2.6 % in July compared with the same month last year – a modest jump that still signals a reversal of the three‑year lull in rent growth.

That modest rise is expected to accelerate dramatically. The property portal projects that by the end of 2026, annual increases for privately rented homes could reach between 4 % and 5 %, a pace that roughly mirrors the average rise in workers’ earnings but far outstrips the 1.6 % dip recorded in February. For tenants, the message is clear: the era of gentle rent climbs is over.

Supply constraints are at the heart of the surge. There are now 3 % fewer homes on the market for renters than a year ago, and each listing is attracting more than five enquiries on average. While the flood of applications seen during the pandemic has eased, the competition remains the fiercest it has been in almost two years, with London bearing the brunt of the pressure.

Adding to the squeeze, higher mortgage rates are deterring many first‑time buyers, nudging them into the rental sector and further inflating demand. The Renters’ Rights Act, which came into force in England in May, represents the most significant regulatory overhaul in three decades, but its impact on affordability is still being felt as landlords navigate new compliance costs.

Geography matters too. In cheaper regions, tenants can absorb modest rent hikes before hitting an affordability ceiling, whereas in high‑cost cities the margin is razor‑thin. Bristol now tops the list as England’s least affordable city for renters, and London continues to see intense demand despite the broader national trend.

What does this mean for you? Renters should tighten budgets, explore options such as sharing or seeking pet‑friendly listings early, and be prepared to act quickly when a suitable property appears. Landlords, meanwhile, need to consider long‑term investment in quality rental stock to meet rising demand and avoid regulatory pitfalls. Ultimately, boosting the supply of well‑maintained homes remains the most sustainable way to ease pressure on both sides of the market.