July's UK rent growth remained strong across most of the country. According to the HomeLet Rental Index, the average UK monthly rent reached £1,369 in July, up 1.2% from June and 4.3% compared with a year earlier. Greater London recorded the fastest annual increase at 6%.
In this article, we rank the regions by July's UK rent growth figures, identify where rent growth is the strongest and explain what this data means for landlords. Because while higher rents can boost rental income, they do not necessarily translate into higher profits once Income Tax and other costs are taken into account.
Key Takeaways
- According to the HomeLet Rental Index, average UK rents increased by 4.3% year-on-year in July, reaching £1,369 per month
- As reported by the HomeLet Rental Index, Greater London recorded the strongest annual rent growth at 6.0%, followed by the East Midlands (4.7%), Scotland (4.1%) and the North East (4%), while Wales recorded the weakest growth at just 0.1%
- According to Zoopla, the supply of rental homes remains around 25% below pre-pandemic levels, helping to sustain upward pressure on rents across much of the UK
- For every additional £1 of rental income, a higher rate taxpaying landlord typically retains around 60p after Income Tax, while an additional rate taxpayer retains around 55p, assuming no other tax reliefs or allowances apply
- Income Tax thresholds remain frozen until April 2031, meaning rising rents can push more landlords into the 40% tax band through fiscal drag, even if the real value of their income has not increased significantly
- Separately, under the Finance Act 2026, property income tax rates for individual landlords will increase to 22%, 42% and 47% from 6 April 2027
Which Regions Have the Fastest Rent Growth?
Greater London is driving July's UK rent growth, recording the strongest annual increase at 6%. It is followed by the East Midlands (4.7%), Scotland (4.1%) and the North East (4%), while Wales recorded the slowest growth at just 0.1%, according to the HomeLet Rental Index.
Monthly movements can fluctuate from one month to the next, so the annual growth rate is the better measure of consistent rental growth.
Rank | Region | Average Rent for July 2026 | Annual Growth | Monthly Change |
|---|---|---|---|---|
1 | Greater London | £2,207 | +6.0% | +1.2% |
2 | East Midlands | £938 | +4.7% | +1.1% |
3 | Scotland | £1,059 | +4.1% | +2.5% |
4 | North East | £729 | +4.0% | +1.2% |
5 | West Midlands | £1,065 | +3.8% | +0.2% |
6 | South West | £1,235 | +3.4% | +1.1% |
=7 | Northern Ireland | £964 | +3.1% | -0.5% |
=7 | South East | £1,475 | +3.1% | +1.4% |
9 | Yorkshire & the Humber | £948 | +3.0% | +0.8% |
10 | North West | £1,110 | +2.6% | +1.3% |
11 | East of England | £1,333 | +2.2% | +0.7% |
12 | Wales | £934 | +0.1% | +0.7% |
Cell | UK Average | £1,369 | +4.3% | +1.2% |
Source: HomeLet Rental Index, July 2026. Figures represent achieved rents on newly agreed tenancies rather than asking prices
London's 6% annual increase will grab the headlines, but the wider picture is just as significant. The East Midlands continues to post exceptional rental growth despite average rents remaining below £1,000 a month, while Scotland and the North East have both exceeded 4%. These figures suggest that a city does not have to be expensive to record strong rental growth. At the other end of the rankings, Wales recorded virtually no annual growth at just 0.1%.
One important point to bear in mind is that the HomeLet Rental Index measures achieved rents on newly agreed tenancies, making it a useful indicator of current market pricing.
What Does July’s UK Rent Growth Look Like in Real Money?
July's UK rent growth adds around £124 a month to the average rent in London, £42 in the East Midlands and £28 in the North East, showing how the same percentage increase can translate into very different amounts of extra income depending on where your property is located. Re-let a London property at July's average and you are collecting nearly £1,500 more over a year than you would have 12 months ago. In the East Midlands, the increase is about £504 a year, while in the North East it is closer to £340.
That is the gross rental income. The amount that actually reaches your bank account is smaller because rental income is taxed at your marginal rate, so how much you keep depends on which Income Tax band the additional rent falls into.
Worked Example: How Much of a Rising Rent Do You Actually Keep?
Imagine you own a Buy-to-Let in the East Midlands. Last July, your tenant was paying £896 a month. This July, you renew the tenancy at £938 a month, in line with the regional average. That's £42 extra every month, or £504 over the year. But that isn't what lands in your bank account after tax.
If You Pay | Extra Rent Collected | Tax Due | You Actually Keep |
|---|---|---|---|
Basic Rate Tax (20%) | £504 | £101 | £403 |
Higher Rate Tax (40%) | £504 | £202 | £302 |
Additional Rate Tax (45%) | £504 | £227 | £277 |
“Rent increase” sounds impressive, but a substantial share never reaches your pocket.
A Separate Tax Rise Coming in April 2027
Even if your rent never increases again, many individual landlords will still pay more tax from 6 April 2027. That's because the Finance Act 2026 introduces separate Income Tax rates for property income in England and Northern Ireland, increasing them from 20%, 40% and 45% to 22%, 42% and 47%.
In practical terms, every additional £10,000 of taxable property income will generate around £200 more income tax than under the current rates. On £20,000 of property income, the increase is about £400. On £50,000, it is approximately £1,000.
The increase has nothing to do with the rental market. It is a tax policy announced in the Autumn Budget 2025 and will apply regardless of whether rents rise, fall or remain unchanged. HMRC estimates that around 2.4 million landlords will be affected.
When viewed alongside July's UK rent growth, the picture becomes clearer. While landlords may be collecting more rent, they will also face higher income tax rates from April 2027, meaning a larger share of their rental profits will go to HMRC.
There is one important exception. Limited companies are not affected by the new property income tax rates. Companies will continue to pay Corporation Tax instead of Income Tax and can still deduct mortgage interest as a business expense before calculating their taxable profits.
That does not mean incorporation is automatically the right answer. Transferring personally owned property into a company is generally treated as a sale at market value, which can trigger both Capital Gains Tax and Stamp Duty Land Tax. Whether incorporation saves tax depends on the size of your portfolio, your borrowing, your future plans and several other factors, making professional advice essential before making the move.
Conclusion
July's UK rent growth is good news for landlords, but it does not tell the whole story. A higher rent does not automatically translate into a higher profit once Income Tax, the finance-cost restriction and other costs are taken into account. The only figure that really matters is how much of that additional rent you actually keep.
If you want a clearer picture, model your own position rather than relying on headline rent increases.
FAQs
There is no fixed legal percentage that caps rent increases in England in 2026. However, under the Renters Rights Act, landlords can generally increase the rent only once every 12 months, must give at least two months’ notice, and the proposed rent must reflect the market rate. If a tenant believes the increase is above the market level, they can challenge it through the First-Tier Tribunal.
Yes. According to the HomeLet Rental Index, the average UK rent reached £1,369 in July 2026, up 1.2% from June and 4.3% compared with a year earlier.
Potentially, yes, but only if the increase reflects the market rent. There is no statutory limit preventing a 33% increase. However, if the proposed rent is significantly above what similar properties command locally, tenants can challenge it through the First-Tier Tribunal, which will decide whether the increase is justified.
In England, there is no maximum annual percentage increase set by law. Instead, landlords can generally increase the rent once every 12 months, provided they follow the correct legal process and the new rent reflects the property's market value.
According to the HomeLet Rental Index, the average monthly rent across the UK was £1,369 in July 2026, representing an annual increase of 4.3%.
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