Rents in more affordable parts of Britain are rising twice as fast as the national average, Zoopla’s latest index shows.
While rental inflation for the UK as a whole slowed to 2.1%, growth in areas where rents average £750 per month or less increased by 5% year on year.
At the same time, demand for rental properties has fallen to the lowest level in six years, with the average number of applications per rental property falling to 5.6 in May, compared to a peak of almost 16 in 2022.
Zoopla found that rents in more expensive markets are held back by restrictions on what tenants can afford, but a lack of supply in cheaper locations is pushing rents up.
The fastest rental growth was recorded in Carlisle, where rents rose by 9.1%, followed by Kilmarnock by 9% and Halifax by 6.5%.
In contrast, rents fell in several larger markets, including Bournemouth, down 1.7%, Nottingham, down 1.5%, and Birmingham, down 1.1%.
Despite the stronger growth, rents in the fastest rising markets remain well below the national average.
Average rental prices in Carlisle, Kilmarnock and Halifax are around £700 per month, around 45-50% lower than the UK average.
Nationally, rental inflation fell from 2.6% a year earlier to 2.1%.
Average incomes are currently rising at an annual rate of 4%, meaning wage growth has outpaced rental inflation over the past eighteen months.
However, supply remains limited as there are 20-30% fewer homes available to rent in every UK region and country than before the pandemic.
London remains an exception to broader market trends.
The capital was the only region where rental demand increased, with inquiries increasing by 6% year-on-year.
Zoopla says higher mortgage rates are keeping potential first-time buyers in the rental market for longer, pushing rental inflation in London to 2.2%, up from 1.9% a year ago.
Average rents in the capital now stand at £2,206 per month.
Zoopla expects rental inflation to remain between 2% and 3% for the remainder of 2026, but warns that affordability gains could prove fragile unless more rental properties come onto the market.
Zoopla managing director Richard Donnell said: “We are seeing a divide in the way different regions and cities are responding to changes in the supply and demand for rental properties.
“Our latest report shows how quickly the rent gap is closing between more affordable regions and major cities where rents are the highest.
“Rent inflation is more muted in most of Britain’s major cities due to already high affordability levels for renters.
“While demand for rental properties is at its lowest level in six years, the low level of new investment in private rental properties means a continued shortage of rental properties, maintaining upward pressure on rental prices.
“It is positive that incomes continue to grow faster than rents nationally, but the experiences of tenants in local areas vary widely and pose a challenge for tenants on lower incomes.
“Increasing the supply of rental housing is the most effective way to improve affordability for private renters, especially those in traditionally more affordable areas who have the least choice and face the biggest price increases.”
Julie Ford, founder of Lettings Advice Service, says: “The rental market is moving into a more sustainable rhythm, with the number of applications per property well below the recent peak in demand.
“This is not a sign of declining demand; renters still need homes, but many are opting for stability under the Renters’ Rights Act, reducing churn rather than need.”
Nathan Emerson, CEO of Propertymark, said: “While it is positive to see rental growth slowing nationally and wage growth starting to outpace rental increases, these figures show that pressures on affordability have not gone away.
“In many areas where rents have traditionally been lower, demand remains strong and limited housing supply is driving prices up faster than the national average.
“The underlying problem remains a chronic shortage of rental supply.
“Propertymark’s own membership data consistently shows that potential demand for tenants continues to exceed available stock, and despite some easing of competition, there are still far too few properties available to meet housing demand.
“This is particularly evident in cheaper locations where tenants often have fewer alternatives and less flexibility as prices rise.
“To improve affordability and offer tenants greater choice, we need greater investment in the private rental sector, greater confidence among existing landlords to stay in the market and a continued increase in the supply of homes to rent.”