Hamptons predicts that rents will rise by 17% between 2024 and 2027, outpacing house price growth of 12.5%.

The agent’s housing market forecast expects a 4.5% increase in 2025, followed by 4% in both 2026 and 2027, driven by the continued squeeze on landlords’ profits due to higher mortgage and servicing costs alongside the deterrent of rising stamp duty on second home purchases.

However, the pace will be constrained by affordability pressures on tenants resulting from past steep rises and broader cost of living challenges.

Rental growth is still outpacing inflation, with both the costs of new contracts and renewals rising. The average rent on a newly let property is projected to increase by 4.5% across Great Britain in the final quarter of this year, a significant drop from the 10.2% growth seen in 2023.

This slowdown is partly due to lower mortgage rates and inflation, which have reduced the need for landlords to increase rent as much as last year, as well as squeezed tenant affordability.

While economic drivers will have the most significant impact on house prices, political risks, such as implementing the Renters’ Rights Bill, are expected to shape rental growth, says Hamptons. This legislation, along with new EPC requirements, may lead to a further reduction in rental property supply as some landlords, particularly older investors, choose to exit the market.                    

Consequently, rental growth is predicted to remain above its long-term historical average of 1.8% annually and stay ahead of inflation.  

Hamptons has forecast that house prices will rise by 3% next year, followed by 3.5% in 2026 and 2.5% in 2027 as the affordability picture improves. It believes 2025 will mark the beginning of a new property market cycle as the mood in the housing market shifts from trepidation to cautious optimism.