Private rent pressures continue to ease, but renters are still suffering a £720 affordability wedge

Growth in private rents continued its recent slowdown, with rents rising by 6.7 per cent in the year to June 2025, down from 7 per cent seen in the year to May. However, rents have still grown far faster than wages over the past three years and created an affordability wedge for renters as a result, the Resolution Foundation said today (Wednesday) in response to the latest ONS private rents data.

Across the UK, all regions saw a slowdown or stagnation in rental price growth. The North East had the largest annual rent rise of 9.7 per cent in the year to June 2025, unchanged in the year to May. Yorkshire and the Humber saw the smallest increase of 3.5 per cent, while in London growth fell from 7.7 to 7.3 per cent. Further easing is likely, says the Foundation, with rent growth for new tenancies falling to 0.7 per cent in June.

But despite this welcome recent relief, over the past three years rent rises have consistently outpaced earnings growth. Since May 2022 nominal wages have risen by 18.6 per cent, but private rents have grown by 24.2 per cent – creating an affordability wedge between renters’ main incomings and outgoings. Had rent rises instead grown in line with wages, average rents would be £720 a year lower.

This worrying picture on private rents is a growing problem for families of all ages across Britain, as the Resolution Foundation’s new housing indicators – published last Friday – show.

The indicators also show that high private rents are particularly bad news for younger households, with around one-in-four households aged 19-29 and 30-49 now renting privately.

The indicators further suggest a worrying rise in older households in the private rented sector. The share of families aged 50-64 renting privately has more than doubled since 2000, from 5 to 12 per cent. With these households unlikely to find their way onto the property ladder before retirement, this uptick in older private renters is something the Government should take note of, not least as it will drive up the housing benefit bill.

Finally, this rise in rental prices will also have consequences for the nearly one-in-four families with children (23 per cent) who live in the private rented sector – a huge increase from the one in twelve (8 per cent) who lived in this tenure back in 2000, the Foundation’s indicators show.

Felicia Odamtten, Economist at the Resolution Foundation, said:

“The continuing slowdown in rent price growth offers a glimmer of hope for the UK’s growing number of private renters who have had a torrid few years when it comes to housing costs.

“Rent rises have consistently outpaced earnings over the past three years, creating a £720 housing affordability wedge and adding to households’ cost of living pressures.

“Younger people and children in the private rented sector will be particularly hard hit by rising rental costs, but an increasing number of older households are finding themselves exposed to high rents, which could have long-term effects on the housing benefit bill.”