Demand to rent a home has fallen off a cliff with landlords having to slash rents to get tenants in the door, property insiders have warned.

Rents are down in towns and cities across Britain. Certain locations have even recorded drops of more than 10 per cent in a year, according to exclusive data from Hamptons estate agents.

In Bristol, they have fallen 5 per cent year-on-year from £1,440 a month to £1,370.

And in Manchester, rents have dropped from £1,210 to £1,160 a month, down 4 per cent over the past year.

The same trend is playing out in London, down 2.3 per cent year-on-year, Leeds, down 2 per cent, and Birmingham, also down 2 per cent. 

And some smaller markets have seen even bigger falls. In Exeter rents have fallen by 13 per cent from £1,190 to £1,040 a month. In Luton rents are down 11 per cent.

Last week Zoopla reported that tenant enquiries have dropped off while the number of available rental homes have risen. This means landlords are having to wait longer to let their properties - and tenants are in a strong position to negotiate.   

Callum Dipple, senior lettings manager at Connells in Birmingham says: 'We’re seeing clear signs of easing pressure in Birmingham’s rental market. 

'It is a result of an abundance of available properties giving renters far more choice - and therefore more bargaining power.'

Nicky Ford, lettings manager at Sutton Kersh in Merseyside, says the situation on his patch is similar. 'Liverpool has seen a modest increase in available rental stock,' he adds.

'At the same time, ongoing cost-of-living pressures have limited what tenants are able or willing to pay, which has slowed rent rises and, in some cases, prompted landlords to moderate or reduce rents to secure tenants and avoid void periods.'

Short term blip or long-term trend? 

Rents falling seems at odds with reports of landlords quitting the sector, which would reduce the supply of homes and drive up rents. 

Britain's private rented sector saw its value decline by 5.1 per cent, or £48billion, in 2025, according to analysis by estate agent Savills, which was the biggest drop this century.

And the average share of properties bought by landlords has fallen to a low of 10.8 per cent so far in 2026, down from 16.5 per cent in 2016, according to Hamptons.

The estate agent says fewer landlords buying, combined with some investors selling, has resulted in 25.4 per cent fewer homes available to rent in February 2026 than in February 2016.

Due to this shortfall, Hamptons' Aneisha Beveridge believes any drop in rental prices is likely to be a short-term blip.

'Rental growth has cooled over the last year, but that’s mainly because demand has eased rather than because the sector has suddenly become awash with supply,' says Beveridge.

'Step back, and the pressure hasn’t gone away. Compared with 2019, there are still around 30 per cent fewer homes to rent. 

'That long‑term squeeze is why rents rose so sharply in the first place.'

However, some property insiders suspect rents will fall further and that the landscape for buy-to-let landlords may deteriorate quickly from here. 

Unemployment is on the rise 

Rising unemployment, particularly among young people, is almost certainly driving demand away from the rental market. If they aren't in work, they are far more likely to stay living with their parents rather than renting privately. 

It is impacted by the fact companies are increasingly using artificial intelligence (AI), removing the need for hiring in some cases.

The Bank of England governor, Andrew Bailey, recently warned that widespread adoption of AI is likely to displace jobs on a scale not seen since the industrial revolution. 

Unemployment is already at its highest level in over five years, according to the Office of National Statistics, having risen to 5.2 per cent in December. The Office for Budget Responsibility expects the unemployment rate to peak at 5.3 per cent this year as people struggle to find work 'amid subdued hiring demand'.

More than 15 per cent of all 16 to 24-year-olds are now not in employment, education or training

Robert Salter, a director at auditor Blick Rothenberg, says: 'An estimated 900,000 students are expected to graduate from universities and colleges over the next few months, while many more 16–18-year-olds will also be looking for their first jobs at the same time. The ONS statistics paint a bleak picture for their ability to find and retain employment.'

Ultimately, fewer jobs will result in more young people staying at home with renting out of the question.  

More people leaving Britain... and fewer coming in 

A continued decline in migration into the UK for work and study is also a major factor in lower rental demand, as well as a rise in people emigrating.

The latest ONS estimates reveal net migration into the UK peaked at 944,000 people in the year to March 2023, but this had slowed to 204,000 in the year to June 2025. 

It also estimates that 252,000 British nationals emigrated long-term in the 12 months to June 2025. 

Lexit's Ashley Osborne warns that Britain is facing an economic reality check having lost its edge. 

'High-end talent is looking elsewhere - people are no longer drawn to the UK,' he says. 'Foreign students are steering clear due to safety fears, family restrictions, and better options elsewhere. 

'Higher earners, such as business owners and skilled professionals, are exiting at scale. 

'Economists now forecast net migration plunging below 100,000 in 2026 - the lowest since 1997. Some even warn of negative net migration this year.'

All this is causing a rental market squeeze, hammering rents right from the cheapest to the most expensive homes.

'All this collides with the incoming Renters' Rights Act,' Osborne adds. 'Landlords will face near-impossible conditions for rent increases amid falling values and rising supply at the high end. Many landlords want to sell but they simply can’t.'

From May, the Act will abolish fixed-term tenancies, give tenants greater power to challenge rent rises and increase penalties on landlords who do not comply. 

First-time buyers are surging

Improving conditions in the mortgage market and slow house price growth are also helping young people get on the property ladder and increase demand for rented homes.

While mortgage rates have spiked by around 0.5 percentage points over the last three weeks due to the conflict in the Middle East, they remain cheaper than they were a year or more ago. 

Just before the conflict began, Zoopla revealed that 40 per cent of UK homes are now cheaper to buy than rent thanks to improving mortgage rates and easing lending criteria - rising to over half of homes in some regions. 

Mortgage lenders also appear to be targeting first-time buyers, not just in the rates they offer for lower deposit deals but in new products hitting the market.

Some are now lending first-time buyers more than previously with a number of offering them the ability to borrow as much as six times their annual salary.

Santander offers a 2 per cent deposit mortgage for first-time buyers, meaning they could purchase a £500,000 home with just a £10,000 deposit.

Hanley Economic Building Society also began offering renters the chance to get on the property ladder without saving a deposit after the mutual launched a 100 per cent mortgage.

The shift may also not purely be down to first-time buyers either. Zoopla says the increase in rental homes also stems from would-be sellers deciding to place their properties into the rental market - particularly if they are struggling to sell. 

Landlords may find it hard to sell up

The incoming Renters' Rights Act, which comes into force on 1 May already has some landlords looking for the exit.

However, landlords hoping to sell may also find they are left disappointed as the number of homes for sale is at a 10 year high, according to Zoopla.

Osborne says his company is being contacted by between three and five landlords a day looking to sell up.

'We are currently contacted by landlords every day who have non-performing assets,' he says. 

'They all have loads of issues with their properties and are looking to get on top of their portfolio and sell up.

'We have to break the news to them that it will be much harder to sell it than it was to buy it.'