The UK’s private rental market is entering a period of adjustment. For years, headlines have been dominated by surging rents and affordability concerns, but fresh research from Pegasus Insight’s Landlord Trends report (Q2 2025) suggests a shift is underway.
According to the study, just 61% of landlords expect to raise rents in the next 12 months, down sharply from 78% a year earlier. On the surface, this looks like good news for tenants. But the story is more nuanced: landlords still planning increases expect them to average 6%, higher than last year’s 5%.
So why are fewer landlords pushing ahead with rent hikes—and what does this tell us about the future of the rental sector?
1. Market Affordability Is Hitting Its Ceiling
Despite strong tenant demand, rents can only rise so far before the market pushes back. The Office for National Statistics reported that average private rents rose 5.7% in the year to August 2025, reaching £1,348 per month.
For many households, wages haven’t kept pace. With inflation squeezing disposable incomes, landlords are increasingly conscious of what tenants can actually afford. As Pegasus Insight’s founder Mark Long puts it, this is price elasticity in action: raise rents too high, and tenants either leave or properties sit vacant for longer.
Landlords appear to be treading more cautiously, recognising that retention and stable occupancy may be more valuable than testing the limits of tenant affordability.
2. Costs Are Still Rising, But Rent Hikes Aren’t the Only Solution
For those still increasing rents, the motivation remains familiar:
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Higher mortgage payments following years of interest rate volatility
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Ongoing maintenance and compliance costs
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New regulatory demands
However, many landlords have already adjusted rents over the past two years to reflect these pressures. The latest figures suggest some may now feel their portfolios are better balanced, at least temporarily. Instead of continual hikes, landlords are focusing on cost management, refinancing strategies, or restructuring their portfolios.
3. The Renters’ Rights Bill Is Reshaping Landlord Behaviour
One of the most significant factors behind the cooling of rent-rise intentions is the looming Renters’ Rights Bill. Expected to receive Royal Assent in late 2025 and come into force by mid-2026, the bill introduces:
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Limits on rent increases (once per year)
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The abolition of Section 21 “no-fault” evictions
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A transition to open-ended tenancies
These changes will alter the dynamic between landlords and tenants. Some landlords are pre-emptively reviewing rents now to ensure they are set at sustainable levels before restrictions bite. Others may be adopting a wait-and-see approach, holding back on further hikes until the full regulatory picture is clear.
4. A Balancing Act Between Profitability and Stability
Landlords remain under pressure. Rising costs and tighter rules are squeezing profitability, yet the sector cannot ignore tenant affordability constraints. The data suggests landlords are attempting a balancing act:
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Raise rents too aggressively, and risk longer void periods.
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Hold rents steady, and potentially absorb more of the cost burden.
This moderation in intentions may reflect a growing realisation that sustainable tenancies are just as important as short-term profit gains.
5. What This Means for Tenants and the Rental Market
For renters, the decline in landlords planning rent hikes is a welcome sign that affordability pressures may ease—at least in the short term. However, with average increases still above 5%, the reality is that costs will continue to rise for many.
For the wider rental market, the shift points to a transitional period. If running costs remain high and regulation tightens further, landlords may eventually reintroduce sharper increases to protect their margins. Pegasus Insight warns that a fresh wave of rent inflation could still be on the horizon.
Final Thoughts
The rental market in 2025 is at a crossroads. Landlords are recognising the limits of what tenants can pay, even as their own costs climb. With the Renters’ Rights Bill set to reshape the sector, many are reassessing their long-term strategies.
The next year will be crucial. If inflation continues to ease and interest rates stabilise, rent growth may moderate further. But if costs escalate or supply tightens due to landlords leaving the market, today’s pause in rent hikes could prove temporary.
Either way, the message is clear: the private rented sector is evolving, and both landlords and tenants are bracing for significant change.