UK rents set to grow by 12.0% over the next five years
Savills’ five-year rental forecast expects rental affordability to improve over the five-year period, as income growth remains relatively high and demand eases.
Rental forecasts (2026-2029)
| 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2026-30 | |
| UK rental growth | 2.5% | 2.0% | 2.0% | 2.5% | 2.5% | 2.5% | 12.0% |
| London rental growth | 2.0% | 1.5% | 1.5% | 2.5% | 2.5% | 3.0% | 11.5% |
| UK Income growth | 3.3% | 2.4% | 2.4% | 3.4% | 3.2% | 2.9% | 15.3% |
Source: Savills, Oxford Economics
“The private rented sector has been uncharacteristically turbulent over the past few years. Rental growth at a macro-level is typically very closely linked to income growth, but that trend has been turned on its head in recent years, with growth peaking at 12% in the year to August 2022,” comments Emily Williams, director of research at Savills.
“As a result of this divergence, the average renter spent a third (32.4%) of their gross household income on rent in 2025 – up from 30.4% five years earlier. This marks the largest worsening in rental affordability since at least 2006, and probably since the early 1990s.
“However, as demand levels start to settle, our forecast indicates that conditions over the next five years are expected to return to more normal levels, with rents increasing at a rate between inflation and income growth. Any significant disruption to supply caused by the Renters Rights Act and other regulation of the market is the key risk to this outlook.”
Demand issues outweigh lack of supply
The UK rental market has faced persistent supply challenges over the past decade. According to Savills, landlord instructions to let homes have been declining since 2017, due to a combination of tax reforms, rising interest rates and anticipated regulatory changes, which have made buy-to-let investment less attractive, prompting some landlords to exit the market.
At the same time, the scale of Build to Rent remains insufficient to fill the gap, averaging just 15,000 completions annually against a backdrop of 4.9 million households in the private rented sector, says Savills.
However, high demand has played an even more significant role. The RICS survey recorded unprecedented tenant demand between 2021 and 2023, due to a post-lockdown spike in activity and a sharp rise in net migration, which has resulted in 600,000 additional households over five years.
This influx equates to a 10% increase in demand within the private rented sector over just two years.
Return to normal market conditions
Savills’ forecast expects demand levels to fall back in line with the more normal market conditions of the 2010s. This comes as first-time buyer numbers have also been elevated during 2025, thanks to easing lending rules, which have increased the flow of households out of the private rented sector, and net migration numbers have also eased.
According to HomeLet, the average rent as a share of income has declined from 33.4% at the end of 2023 to 32.4% in the third quarter of 2025, indicating an early movement back toward the long-term trend.
Over the next five years, Savills expects rents to continue to adjust accordingly, with growth anticipated to align between the rates of CPI inflation and household income growth.
“As it stands, the main risk to our forecast is the potential for another surge in net migration, or a major supply shock on a similar scale,” continues Emily.
“So far, the outflow of landlords from the private sector has been gradual, however, now that the Renters’ Rights Act is law, it is vital that being a landlord remains profitable and appealing. If investment into the sector shrinks further, we could see a supply-side shock to match the demand surge that has already made renting so difficult in recent years.”