Rental inflation remains at its lowest level for almost a year, with fresh data suggesting that the rapid rent rises seen in recent years are continuing to ease despite ongoing rental supply shortages.
According to the latest Goodlord Rental Index, average rents across England were just 1.7% higher in May than they were a year earlier, marking the second consecutive month in which annual rental inflation has remained at its lowest level in ten months.
The average monthly rent reached £1,211 in May, up from £1,191 at the same point last year. While rents edged up by 0.5% compared with April, the pace of growth remains well below both wider inflation and wage growth.
The figures are based on completed tenancy agreements rather than advertised rents, providing a picture of what tenants are actually paying in the market.
The latest data suggests that April’s slowdown was not a one-off. Annual rental inflation is now less than half the rate recorded in May 2025, when rents were rising by 3.6% year-on-year.
The cooling trend comes despite continued pressure on housing supply. However, falling levels of net migration are likely to be easing demand, helping to moderate rental growth in many parts of the country.
Although rents increased slightly between April and May, this year’s spring market is behaving differently from previous years. Average rents remain marginally below the £1,212 recorded in March, making 2026 the first year since the pandemic that rental prices in May have failed to exceed their March level.
A sharp rebound in the North East helped push national rents higher after the region recorded a 5.5% monthly increase in May, following a 4.9% fall in April. Yorkshire and the Humber also recovered strongly, with rents rising 3.2% after declining the previous month.
However, rents fell month-on-month across several regions, including the East Midlands, East of England, South West and North West.
London once again recorded the strongest annual rental growth in the country. Average rents in the capital increased by 5.6% over the year, climbing from £2,077 to £2,194 per month.
The rise comes against a backdrop of weak housebuilding activity in the capital, where delivery levels remain significantly below housing targets.
Elsewhere, rental inflation across northern regions has cooled from the stronger growth seen earlier this year. Annual increases stood at 3.9% in the North East, 3.2% in Yorkshire and the Humber and 1.6% in the North West.
Some regions continued to see rents fall on an annual basis. Average rents in the East of England were down 1.5% year-on-year, while the South West recorded a 0.4% decline. The East Midlands also saw annual rental inflation turn negative, falling by 1% after recording growth of 4% just a month earlier.
The latest figures suggest that while rents remain elevated, the market is entering a period of significantly slower growth, offering some relief to tenants after several years of sustained increases.
William Reeve, CEO of Goodlord, said: “A month on from the introduction of the Renters’ Rights Act, it’s clear the market is still recalibrating. Whether the new legislation will bring the widespread disruption and price volatility many have predicted remains to be seen. Nonetheless, the overall picture is one of a rental sector that has fundamentally changed.
“While average prices have recovered slightly from their drop in April, this is the first time since 2020 that rents in May have been lower than they were in March. These figures reflect a market being pulled in two directions: on one hand, reduced net migration is easing demand-side pressure; whilst the Renters Rights Act and continued underdelivery in housebuilding particularly in London, is constraining supply on the other. How these forces play out over the coming months will be critical in determining the trajectory of rental prices.”
