London records greatest rental inflation slowdown says Zoopla

London has recorded the greatest slowdown in rental inflation, with average rents 1.3% higher over the last year, down from 8.7% a year ago, according to Zoopla, with an average monthly rent of £2,188. Rental inflation is less than 1% in inner London areas, led by Kensington & Chelsea. London also has the highest rents, averaging £2,190 per month.

Zoopla says rental market conditions are improving, but the supply-demand imbalance is set to remain over 2025. Affordability will limit rental inflation in areas with high rents, but there is room for rents to rise faster than earnings in more affordable areas over 2025.

Average UK rents are expected to rise by 4% in 2025, with large cities and London lagging while rents rise in more affordable areas. Demand for privately rented homes will continue to be supported by a range of factors, including:

1. The unaffordability of homeownership for first-time buyers

2. Migration for work and study

3 .Low growth in the size of the social rented sector

One-off pandemic factors that drove the boom in rental demand in 2022 are now behind us, and tighter visa rules are starting to reduce pressures from higher levels of migration.

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