Why Are Tenant Enquiries Falling in the UK?

The UK lettings market is seeing a dramatic reversal, with new data indicating a sharp fall in tenant enquiries. Letting agents have seen 24% fewer enquiries from prospective tenants than at this time last year, as changing migration patterns, improving mortgage markets and a moderation of rental growth begin to take effect.

Rents are 2.4% higher than last year, the slowest rate of growth in four years. That is half the rate of just a year ago. The average monthly rent is £1,300, £30 higher year-on-year, indicating the market is moving into a more balanced period after years of double-digit increases.

What’s Causing the Drop in Tenant Enquiries?

One of the biggest drivers of the slowdown is the government's tighter visa rules, which have seen migration fall by nearly half in 2024. At the same time, mortgage affordability changes introduced at the start of this year gave first-time buyers a 20% increase in borrowing capacity. This has resulted in a 30% rise in first-time buyer mortgages, with many leaving rented accommodation and moving into ownership.

The twin effect is weakening rental demand and causing more properties to return to the market. Added to that, stabilising mortgage rates and rising wages are making it possible for more renters to transition into ownership, again relieving pressure on the rental market.

Are More Homes Coming into the Market?

The availability of rental properties has risen noticeably, by 19% over the past 12 months. Letting agents have, on average, 19 properties to let, an increase from a low of 14 in 2022.

This increased supply comes from several sources. A revival of Buy-to-Let investment, driven by a 36% increase in UK rents since 2020, has lured landlords back into the market. New Buy-to-Let purchase loans are 60% greater. At the same time, existing homeowners who are unable to sell are renting out their homes instead, particularly in the South West and East Midlands, where rental stock has jumped by 36% and 31% respectively.

Changing Times for Tenants

With more properties available and less competition, tenants are seeing greater choice and flexibility. Properties are taking an average of 16 days to let, a significant change from the extremely short times at the height of the supply squeeze. Tenants no longer feel the same pressure to accept the first property they are shown, and landlords need to compete harder on quality and price.

However, even as the market normalises, affordability challenges remain. Home ownership remains out of reach for a significant number of individuals, which continues to sustain rental demand above pre-pandemic levels. This balancing act will see that while rent growth is slowing, the industry will not experience a sharp decline in demand.

Key Takeaway: Tenants Will Get Breathing Space

Experts are forecasting rental growth of around 3% in 2025, with average monthly rents to reach £1,320 by the end of the year. The portal says a combination of lower migration, improved mortgage availability for first-time buyers and revitalised landlord investment is rebalancing supply and demand more evenly.

The turn represents a significant change from the highly competitive environment of the past few years, when demand far outstripped available supply. While affordability will still be a constraint, the coming months may give tenants a bit more breathing space as the market moves towards a more sustainable balance.