UK Renters Now Pay More Than Homeowners | Market Insights

The UK rental market continues to shift. New data from Zoopla shows renters are now paying more each month than homeowners with mortgages.

For overseas investors, this matters. The growing gap between rent and mortgage repayments creates a window of opportunity, if you know where to look.

Rising Rents vs. Mortgage Repayments

The numbers speak for themselves:

• Average rent in the UK: £1,283/month
• Average mortgage repayment: £1,154/month

That’s an 11% difference or £129 every month.

In the past three years:

• Mortgage repayments have risen by £218/month
• Rents have risen by £221/month

The takeaway? Rents have outpaced mortgages and are continuing to climb.

Why Are Rents Rising Faster Than Mortgage Costs?

Several factors are putting pressure on the rental market:

• Supply of new rental properties has dropped
• Fewer landlords are entering the market
• Demand remains high, especially in cities with growing populations
• First-time buyer affordability challenges keep more people renting longer

This imbalance is pushing rents higher in many parts of the UK, particularly in areas where new housing has stalled.

Where Rents Are Rising Fastest

Certain regions have seen some of the steepest increases.

• Oldham, Wigan, Bolton: Rents are up more than 31% in three years
• Outer London: Still the most expensive overall, but areas like Ilford  have seen rent jump by £400/month since 2021
  
  
  

These shifts matter for investors. They show where demand is strong and where returns may be growing fastest.

Current Market Dynamics

Rent growth is starting to slow, but not reverse.

• The rate of rental inflation is now at a four-year low
• Demand has cooled slightly after sharp spikes in 2022 and 2023
• Improvements in the mortgage market are helping more people buy

Even with this moderation, rents remain high. Supply still hasn’t caught up with demand.

Opportunities for Property Investors

Key advantages for investors:

• Cash flow: Monthly rents remain strong across many cities
• Capital growth: Undersupplied areas often deliver long-term value increases
• Diversification: Multi-let properties (HMOs) are in higher demand as tenants seek more affordable options

Impact on Tenants

Tenants are feeling the squeeze.

• Lower-income renters are being priced out of key areas
• Many are moving further from urban centres
• Shared accommodation is growing in popularity, especially among young professionals and students

For investors, this points to new demand for:

• HMOs in well-connected areas
• Smaller units in commuter zones
• Purpose-built shared housing models

What Needs to Be Done

To ease pressure on renters, the UK needs more homes, both private and social.

The government has committed to increasing supply, but development takes time. Until then, rental demand is likely to remain high.

This presents an opening for private landlords to meet that demand while building stable, income-generating portfolios.

Investor Outlook: Why Invest in the UK Now?

If you're considering entering the UK market, now may be the time.

Key reasons:

• High demand across key cities and regions
• Limited supply keeping prices strong
• Affordable entry points outside of central London
• Regional growth and infrastructure investment driving tenant interest

Many overseas investors, particularly from the Middle East, are choosing to diversify into the UK’s property sector as a long-term, income-focused strategy.

The data supports this: even with a slowdown in growth rates, demand is strong and rental returns are solid.

Final Thoughts

The UK rental market is shifting, but the fundamentals remain clear. Renters are paying more than homeowners, and the gap isn’t closing quickly.

If you're an investor focused on cash flow, growth potential, or portfolio stability, the opportunity is there, especially outside central London.

Magnate Assets helps overseas investors build smart property portfolios in the UK.
From HMOs in high-demand areas to family homes in commuter belts, we connect you with properties that perform.

Get in touch to explore your options in the current market.