UK rents now higher than mortgages: What this means for renters
The UK rental market has reached a pivotal point: average rents have now overtaken average mortgage payments for the first time in recent memory.
According to a new report by Zoopla, the typical monthly rent stood at £1,283 in March 2025, edging above the average mortgage repayment of £1,154. Over the past three years, rental costs have risen by a staggering 21%, compared to a 20% increase in mortgage costs.
This shift reflects deeper pressures within the housing market. As mortgage rates soared following the Bank of England’s base rate hikes, many would-be buyers opted to remain in rental properties.
At the same time, the supply of rental homes hasn’t kept pace, especially in urban areas, pushing rents ever higher.
The regional breakdown
Some parts of the country have been hit particularly hard. Northern towns such as Oldham, Wigan, and Bolton have seen rent increases of over 30% since 2022.
It may come as no surprise to learn that in outer London, the absolute increases have been eye-watering. Ilford, for example, recorded a £400 monthly rise, with similar jumps across areas like Watford and Enfield.
And in some parts of the country, that pressure is even more acute. Beaconsfield, for example, a prime commuter town just outside of London, has recently been named Britain’s most expensive postcode for renters, highlighting just how sharply location can influence monthly costs.
This dynamic isn’t just limited to high-demand cities. Commuter zones, mid-size towns, and post-industrial areas have also become pressure points, as renters compete for limited housing stock.
Why is this happening?
The rent-versus-mortgage gap is driven by a few key trends:
Higher interest rates have made buying homes more expensive, delaying many renters' transition to ownership.
With tighter regulations and increased costs, fewer landlords are investing in buy-to-let properties.
Tenant demand remains robust, particularly in employment hotspots and university towns.
Supply remains low, especially as new rental homes take time to come online.
For landlords still in the market, this has led to stronger rental yields. But for tenants, it has meant more competition, less bargaining power, and tighter household budgets.
Is there relief in sight?
There are early signs that the pace of rent increases may finally be slowing. By April 2025, the UK’s annual rent inflation dropped to 2.8%, its lowest in four years.
However, even if growth moderates, rents are unlikely to fall, especially given that the underlying supply shortage has yet to be resolved.
Renters are now spending an average of 34% of their household income on rent, compared to just 19% for homeowners with mortgages.
This growing affordability gap is prompting calls for reform, including stronger rent controls, more social housing investment, and greater support for first-time buyers.
What can renters and landlords do?
For renters, this is a good time to:
Review tenancy agreements carefully before renewing or moving
Explore emerging areas with better affordability and access to transport
Consider co-living or flexible tenancies to improve value for money
The calls for reform are getting louder and some places are listening. Schemes such as no-deposit mortgages are starting to make a comeback, marking a significant opportunity for first-time buyers to get on the property ladder.
For landlords, the current market still offers good returns, but it’s wise to stay ahead of upcoming changes, particularly those tied to the Renters’ Rights Bill. Transparent, fair rental practices will also help reduce tenant turnover and improve long-term income.