Rent falls for first time on record as young people stay living with mum and dad

Rent fell for the first time on record last year, new data has revealed, as the number of first-time buyers surged and less young people stay living with their parents.

The cost of newly-agreed rents dipped by 0.7 per cent across the UK in 2025, according to estate agency Hamptons. It is the first rent fall over a calendar year since the agency began recording the data in 2011.

The slowdown in rental growth started in London, which recorded the largest falls in newly agreed rents by 2.7 per cent, or £63 per calendar month, over 2025. This spread outwards so that by December, rents were also falling in the South East by one per cent, the East Midlands (-0.2 per cent), Yorkshire & Humber (1.4 per cent) and in Wales (0.8 per cent).

Rents rose to record levels in London in 2023, as the rental market overcrowded when mortgage rates skyrocketed to prevent first-time buyers getting on the ladder. Inner-city rent in the capital hit a record high of 13.2 per cent in November 2023, while the country registered at 10.2 per cent.

Aneisha Beveridge, head of research at Hamptons, said that the drop in rents was driven by an increasing market for first time buyers rather than tenant affordability.

“On paper, 2025 looked like a good year for tenants. Rents on new lets ended 2025 lower than they started, and tenants had more choice than before. However, falling rents were driven more by strong first-time buyer numbers and wider economic weakness than by improved tenant affordability. Fewer tenants are taking their first step into the rental market, with many staying at home longer and being reluctant to commit to the cost of renting a place of their own.”

Data from the Institute for Fiscal Studies last year found an increase in the share of 25 to 34-year-olds living in family homes by a third since 2006.

Hamptons noted that a weakened labour market limited how much rent tenants can afford as well as the number of first time buyers. Rents on renewed tenancies are continuing to go up by 4 per cent or more, the report revealed.

First time buyers accounted for one-third of home purchases in 2025 across the country, and as many as 50 per cent in London, which Hamptons put down to lower interest rates allowing them to secure mortgages. They said this had also benefited landlords, who can now secure cheaper remortgaging deals.

Despite the fall in rent prices, the estate agency predicted that the market will continue to grow in 2026 as landlords find new ways to accrue the cash. The Renters’ Rights Act, to be implemented in May, could lead landlords to push up advertised rents, they predicted.

Ms Beveridge said: “But towards the back end of the year, it’s possible the implementation of the Renters’ Rights Act may start proving inflationary for agreed rents. If landlords start to find the procedural and legal machinery underpinning the new rules lacking, it is likely to slowly squeeze rental homes out of the market. From a supply perspective, the lack of appetite means the share of homes bought by investors could fall below 2025’s already low levels.”