Tenant Demand & Rents Trends: Navigating Rising Rents and Shifting Tenant Behaviour in 2025

Tenant demand & rent trends remain central concerns for landlords across England in 2025. While rental prices continue to climb by 7% in the year to May 2025, there are signs of slowing growth compared to the peak inflationary period of 2023–2024.

At the same time, tenant demand stays strong across many regions, but affordability pressures are mounting. Landlords must weigh opportunities for portfolio expansion against looming regulatory changes.

This article explores the key developments shaping tenant demand & rent trends in England, including regional variations, affordability concerns, supply constraints, and landlord sentiment.

Tenant Demand & Rents Trends in 2025: A Year of Transition

Tenant demand & rent trends have shifted from the breakneck growth seen during the post-pandemic housing surge. The 7% annual increase to May 2025, while significant, reflects a deceleration from previous years when double-digit hikes were commonplace.

This moderation is partly due to stretched affordability among renters, who are facing higher living costs, rising utility bills, and stagnant wage growth. Nonetheless, demand remains robust, driven by demographic pressures, a limited supply of rental homes, and barriers to homeownership.

Affordability Challenges: Renters Under Strain

Tenant affordability has become a defining factor in current tenant demand & rent trends. A growing number of renters are spending more than 35% of their income on rent, far exceeding the traditionally accepted affordability threshold of 30%.

Rental affordability pressures are particularly acute in cities such as London, Manchester, Bristol, and Brighton. Even in lower-cost regions like the Midlands and Northern England, renters are facing more challenging conditions due to wage stagnation and energy costs.

According to recent industry surveys, more than 60% of tenants say they have had to cut back on other spending to afford their rent. Late payments and arrears are increasing in some areas, placing greater financial risk on landlords.

Landlord Confidence and Portfolio Growth Intentions

Despite affordability concerns, a large proportion of landlords remain confident in the private rental sector’s long-term viability. Many are responding to tenant demand & rent trends by planning to expand their property portfolios.

A May 2025 landlord sentiment survey revealed that over 40% of landlords are either actively looking to purchase more rental properties or are considering it within the next 12 months. Factors driving this confidence include:

• Rising rental yields in many regions
• Increased demand for quality, well-managed rental homes
• Reduced competition as smaller landlords exit due to regulatory fatigue

Landlords with financial flexibility are taking advantage of opportunities to invest in areas with strong demand and growing populations.

Regulatory Pressures Looming in 2025

Alongside growth opportunities, landlords are also bracing for significant regulatory changes. These shifts will inevitably shape future tenant demand & rent trends.

Key upcoming regulatory changes include:

• Implementation of the Renters’ Reform Bill, which will abolish Section 21 “no-fault” evictions, impose new tenancy standards, and strengthen the Decent Homes Standard.
• Energy efficiency regulations which may soon require all rental properties to achieve an EPC rating of C or higher by 2030.
• Increased service charge transparency and tribunal powers under the Leasehold and Freehold Reform Act 2024.

These changes are expected to increase operational costs for landlords, potentially pushing up rents further. However, they may also encourage better-quality rental stock and professionalisation of the sector.

Regional Breakdown of Tenant Demand & Rents Trends

While national averages provide helpful insight, tenant demand & rent trends vary considerably across England:

London: The capital has seen a resurgence in rental demand post-pandemic. Rents are up by 8.2% annually, driven by international workers returning, limited housing supply, and renewed interest in urban living.

South East and South West: Rental growth in commuter towns remains strong as remote and hybrid work trends continue. Towns like Reading, Guildford, and Bristol report strong tenant interest and low void periods.

Midlands: Birmingham, Coventry, and Nottingham are seeing steady demand due to their growing student and young professional populations. Yields remain attractive, and rental growth is outpacing inflation in some areas.

North of England: Cities like Manchester and Leeds are experiencing sustained demand from students and young professionals, with rents increasing 6–9% in the past year. However, affordability issues are emerging due to wage stagnation.

Coastal and rural regions: These areas experienced significant rent inflation during the pandemic due to urban-to-rural migration. Demand is now stabilising, though some holiday let conversions continue to remove long-term rental homes from the market.

Tenant Behavioural Shifts: New Preferences and Expectations

A notable part of current tenant demand & rent trends is the shift in tenant expectations. Renters in 2025 are increasingly prioritising:

• Energy efficiency and low running costs
• High-speed internet and smart home features
• Pet-friendly policies
• Flexible tenancy terms
• Access to green space or working-from-home amenities

Landlords who align their offerings with these preferences can attract longer-term tenants and command premium rents.

Build-to-Rent Sector: Institutional Impact on Tenant Demand & Rents Trends

The build-to-rent (BTR) sector continues to expand, especially in major cities. These purpose-built developments offer professional management, communal facilities, and consistent tenancy standards.

BTR schemes are reshaping tenant demand & rent trends by:

• Attracting tenants seeking security and amenities
• Setting higher local benchmarks for rent and quality
• Creating competition for individual landlords

While BTR is still a small fraction of the total rental market, its influence is growing, particularly among young professionals and corporate renters.

Short-Term Lets and Regulatory Shifts

Short-term and holiday lets have drawn homes away from the long-term rental market, particularly in tourist-heavy areas like Cornwall, Devon, and the Lake District. This trend has reduced rental supply, contributing to upward pressure on rents.

However, tighter regulation of short-term lets, such as licensing requirements and planning rules, may ease some pressure on tenant demand & rent trends by returning more homes to long-term rental use.

Supply Constraints: A Persistent Challenge

One of the most consistent drivers behind tenant demand & rent trends is the shortage of available rental homes. Planning restrictions, higher interest rates, and the exit of small landlords have all contributed to the supply crunch.

Without significant government intervention or incentives to increase rental housing stock, rents are likely to remain elevated. Private landlords who stay in the market will benefit from reduced competition, but face rising compliance costs.

Technology and Data Shaping the Rental Market

Modern proptech tools are empowering landlords and letting agents to better understand and respond to tenant demand & rent trends. Platforms now offer real-time rental data, predictive modelling, and tenant screening tools to support decision-making.

Landlords using tech to streamline operations, enhance compliance, and improve tenant experience are better positioned to navigate the evolving rental landscape.

Outlook for Tenant Demand & Rents Trends into 2026

Looking ahead, tenant demand & rent trends are expected to remain stable but influenced by key factors:

• Interest rate shifts and mortgage market changes
• Implementation of new rental regulations
• Energy efficiency upgrade deadlines
• National and local housing policy

While rent growth may slow in some areas due to affordability ceilings, demand is unlikely to fall significantly unless homeownership becomes substantially more accessible.

FAQs: Tenant Demand & Rents Trends

Why are rents still rising in 2025?

Rents are rising due to sustained tenant demand, limited rental housing supply, and landlords passing on higher costs related to regulation, maintenance, and financing.

Are tenants struggling to pay rent?

Yes, affordability pressures have increased. Many tenants report spending a larger portion of their income on rent, leading to arrears and late payments in some regions.

Will new regulations impact rents?

Yes. Regulations around energy efficiency, tenant rights, and property standards may increase landlord costs. These costs could be passed on to tenants, further influencing rents.

Is it still a good time to invest in buy-to-let?

For well-capitalised landlords with a long-term view, opportunities still exist, mainly in areas with high demand and attractive yields. However, investors must consider rising compliance burdens.

What trends are shaping tenant behaviour in 2025?

Tenants are prioritising energy efficiency, pet-friendly homes, digital connectivity, and flexibility. Landlords that cater to these preferences are more likely to attract stable tenants.

• www.gov.uk/government/publications/private-rented-sector-england
• www.ons.gov.uk
• www.rics.org