British rents hit record high as landlord exits squeeze supply

Rents across Britain climbed to a record high in August as a falling stock of available lets pushed advertised monthly payments to new levels, property portal Rightmove said.

Rightmove reported the average advertised monthly rent reached £1,577 in August, up 2.9% year-on-year. While tenant demand has cooled, the firm said supply has plunged, intensifying competition for the smaller pool of properties and driving up asking rents.

Industry analysts and market participants point to a series of cost pressures that have encouraged buy-to-let investors to exit the market, tightening supply. A surcharge on second homes introduced in last year’s Budget increased the stamp duty bill for many property investors, adding thousands of pounds to acquisition costs overnight. Landlords also face forthcoming regulatory costs to raise Energy Performance Certificate (EPC) ratings to a C band for many properties, a move that could require substantial spending to upgrade insulation, heating and other systems.

Mortgage costs have also played a role. Although mortgage rates have started to fall from their recent peaks, they remain well above the ultra-low levels seen a few years ago. Landlords typically pay higher rates on buy-to-let mortgages than owner-occupiers, which has compressed rental yields and made some investments no longer viable.

The cumulative effect of tax changes, higher financing costs and impending minimum energy efficiency standards has contributed to a wave of disposals by small and large landlords over the past year, industry sources say. Those disposals have not yet translated into a significant increase in rental supply, in part because many landlords are selling into a sales market where transaction volumes and buyer appetite have also been affected by higher borrowing costs.

Rightmove’s figures reflect advertised asking rents rather than agreed tenancy renewals or new lets negotiated below asking price, but they are widely used as a near-term indicator of market pressure. The portal’s data comes amid broader signs of strain in the private rented sector, where affordability for tenants has tightened as wages and benefits have not kept pace with rising housing costs.

Higher rents increase cost pressures for tenants and may prompt more households to seek social housing or shared accommodation, placing additional demand on other parts of the housing system. Policymakers and market participants will be monitoring whether gradual declines in mortgage rates and any adjustments to regulation stem further exits by landlords and allow supply to recover.

Rightmove’s August rental snapshot and recent government policy changes underline how tax, regulatory and financing shifts can feed through rapidly to rental markets, altering incentives for investors and affecting millions of households who rent privately.