The UK rental market is facing renewed pressure as elevated mortgage rates encourage more potential homebuyers to remain renters for longer, limiting the supply of rental properties and causing rental prices to increase. Property website Zoopla has forecast that rental prices across the UK could rise by between 4% and 5% annually by the end of the year.
Recent months have seen heightened demand for rental properties, with many would-be first-time buyers unable to secure mortgages amid higher interest rates. At the same time, the influx of homes available to rent has been lower than levels recorded in 2025, further tightening the market.
Zoopla reports that the annual rise in rental prices accelerated from 1.6% in February 2026 to 2.6% in July, with the average monthly rent reaching £1,340. Richard Donnell, Zoopla’s executive director, explained: “After three years of improvement in rental supply and a slowing of rental growth, the market is beginning to constrict again.”
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Donnell emphasised the sensitivity of the rental sector to fluctuations in property availability, noting that “higher mortgage rates are affecting not only the housing sales market but also prolong the time many would-be buyers spend renting. This effect reduces the supply of rental homes just as demand typically increases seasonally.”
He added that rents are rising most sharply in London, where mortgage rate increases have had the greatest impact on buyers, as well as in more affordable rental markets where tenants are better able to absorb higher costs. However, affordability continues to limit how much rents can increase.
Low levels of new investment in rental properties and longer rental durations among tenants underpin Zoopla’s expectation of a 4% to 5% rise in UK rents by year’s end. Donnell advocates for increased investment in rental housing as the “most sustainable means of expanding choice for renters and maintaining stable rent levels over time.”