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Demand for UK rental properties was at its lowest in January for seven years, as improved affordability for first-time buyers and falling levels of immigration eased competition among tenants.
Estate agents last month received an average of 5.8 enquiries per rental property listing, the lowest figure for the start of the year since 2019, according to data collated by property portal Zoopla for the FT.
Overall rental enquiries were down by a fifth in January 2026 compared with the same month in 2025, the figures showed.
Richard Donnell, executive director at Zoopla, said the sharp drop in rental demand was in part the result of “better affordability”, with wages rising faster than house prices and a drop in mortgage rates enabling richer renters to purchase a property.
He also cited the big fall in net migration — down 69 per cent to 204,000 in the year ending June 2025 — as a factor behind the decrease in demand for rental properties, which are usually the first option for new arrivals.
The figures from Zoopla chime with separate data published by the Royal Institution of Chartered Surveyors in January.
Its measure of tenant demand slipped to minus 27 in December from minus 22 in November, the lowest reading since the early stages of the pandemic, when the property market was largely shut. It showed that most regions reported falling demand.
The index measures the difference between the proportion of estate agents reporting a rise and a decline in rental enquiries and signalled a “significant loss of momentum in demand”, according to the professional body.
House prices for typical first-time buyers relative to earnings dropped below their long-term average at the end of 2025, with mortgage affordability also improving, according to Nationwide.
Figures published on Monday by the building society showed UK house prices rose at an annual rate of 1 per cent in January, well below the annual rise in earnings of 4.7 per cent in the three months to November.
A loosening of restrictions on mortgage rules set out by the Financial Conduct Authority, the financial regulator, last year has also helped prospective first-time buyers.
Data from the Bank of England showed about 27.4 per cent of loan value went to first-time buyers in the third quarter of last year, almost double the 2007-2019 average of 15 per cent.
But Nationwide and other lenders on Monday announced increases in mortgage rates as financial markets reassessed expectations for interest rate cuts.
Hina Bhudia, partner at Knight Frank Finance, said: “These are fairly small increases at the moment, but they threaten to sap momentum from the recovery in activity that was strong through January.”
Rental demand is still historically elevated relative to supply. But together with easing borrowing costs, weaker demand has also helped reduce rent inflation.
Rental price growth slowed to 4 per cent in December, according to official data, the lowest reading since spring 2022 and below the pace of wage growth.
Ian Morton, principal at Scottish estate agent Bradburne & Co, said: “There are fewer tenants looking to rent, and therefore the rental increases have levelled out.”
The government’s incoming Renters’ Rights Act — which ends “no-fault” evictions and restricts landlords to one rent increase a year — is also affecting the market, despite not taking effect until May 1.
The latest Rics survey showed a widespread decline in rental listings. Its measure of “new landlord instructions” was minus 39 in December, marking an unprecedented fifth consecutive monthly reading below minus 30.
William Delaney, property consultant at Coopers of London, said the estate agency had assuaged some clients’ concerns about the incoming legislation.
But with the legislation likely to further burden a stretched court system, “landlords continue to flee the private rental sector, and many unsold vacant properties stand empty, not being returned to the rental market”, he added.