Demand in the rental sector has cooled as more tenants become homeowners, according to the latest Hamptons Lettings Index.
The number of tenants signing up with letting branches in Great Britain was down 17% on the same time last year and 28% below 2019 levels.
This drop was seen across the country, with 63% of branches reporting fewer tenants registering in May 2025 compared to May 2024.
This was the 12th straight month that tenant demand was lower year-on-year.
Falling interest rates mean landlords coming off short-term fixed-rate mortgages have seen monthly payments fall, according to Aneisha Beveridge, head of research at Hamptons.
Lower mortgage rates mean more tenants have found it cheaper to buy than rent.
Beveridge said: “While rates remain high relative to pre-Covid times, three years of above-inflation rental growth mean that for most, buying remains cheaper than renting.
“This has boosted first-time buyer numbers and reduced demand in the rental sector.”
For first-time buyers (FTBs) with at least a 10% deposit, the cost of buying was lower than renting.
This shift hit tenant demand hardest in more affluent areas, where tenants are most likely to buy.
Tenant demand fell 50% more in the most affluent areas than in the least affluent areas.
There were an average of 1.5 tenants registering to rent for every prospective FTB so far in 2025.
This ratio nearly halved since mortgage rates peaked in 2022 and 2023, driven by fewer tenants and more FTBs.
London and Scotland both saw more FTBs than tenants for the first time in at least 10 years.
In London, FTBs made up 50.3% of new buyer registrations this year, with numbers up 2% year-on-year.
There were 5% more homes on the rental market at the end of May than a year earlier.
The number of rental homes increased annually in every month since August 2022, even though new buy-to-let (BTL) purchases dropped.
The average rent on a newly let property in Great Britain rose 1.5% over the last 12 months to £1,366 per month.
This matched the pace of 2013 and the longer-term average.
In May 2024, average rents increased by 5.1% annually, so growth slowed by nearly two-thirds over the last year.
Additionally, research showed that for the 20th month in a row, rents on renewals grew faster than new lets.
Tenants renewing saw rents rise by an average of 3.7% to £1,267 per month in May.
The average tenant renewing paid £99 less per month than someone moving into a new home.
For new lets, rental growth was highest in the North and the Midlands.
London rents fell 0.5% on the same time last year, pulling down the national rate by 1.0%.
Rents in London were now below where they were in June 2023.
