Rental market shows signs of softening demand in January

Update on Goodlord Rental Index methodology: The Goodlord Rental Index is, from this edition onwards, expanding the number of regions it tracks to provide a more granular picture of the rental market across England. Learn more at the end of the blog.

In January, rents rose by 2.3% year-on-year. This level of inflation sits much lower than year-on-year rates recorded at the same time last year (January 2025), when prices were up 4.6%. This, combined with a lengthening of void periods over the last month, may indicate cooler levels of tenant demand across England after years of intense competition for properties.

• Annual rental inflation up 2% across England
• Monthly rents rebound in January after December dip
• Voids lengthen indicating lower demand
• Analysis from Goodlord CEO, William Reeve
• Rental Index methodology

Annual rental inflation up 2% across England

The average cost of a rental property in England during January 2026 was £1,201. This is a 2.3% increase on prices recorded at the same time last year, when rents were £1,174 per property, on average.

This is a far lower level of rental inflation when compared to figures recorded last January (2025), when rents were up 4.6% year-on-year, indicating a softening of the pace of price increases over recent months.

The latest figures means rental inflation now sits below Consumer Price Inflation, which was recorded at 3.6% in December, and below wage growth, which was recorded at 4.5% over the last quarter.

This January, all but one of the nine regions monitored by Goodlord recorded an annual rise in the cost of rent. The most significant price shift was seen in the North East, where rents are up 6% year-on-year. The East Midlands, North West, South East, and South West, all recorded inflationary increases of over 3%.

The only region to record a year-on-year reduction in rental prices was the East of England, where rents dipped by 1.9% compared to last January.

Monthly rents rebound in January after December dip

Month-on-month, January rents increased by 2% compared to December, after a notable dip in prices over the Christmas period. Rents climbed from £1,178 to a new average of £1,201, as the market shook off some of its winter chill.

The most sizeable shift was recorded in the North East, where prices rose by over 8% in January. The South West saw month-on-month rises of 6% and prices rose in London by 3%.

However, there weren’t price rises across the board. The South East, East of England, and Yorkshire and the Humber all recorded slight declines compared to December figures, indicating softening demand in certain regions.

Voids lengthen indicating lower demand

The early signs of softening demand were also seen in this month’s void averages, rising from 23 days to 26 days.

The Index recorded a lengthening of voids in six out of the nine regions monitored. Averages jumped from 18 days to 26 days in the North West, and were up from 21 to 32 days in the East of England.

Voids only shortened in one region - London - and remained unchanged month-on-month across the East Midlands and Yorkshire and the Humber.

These void figures, alongside the cooler of annual rental pace inflation, could indicate a softening of tenant demand across England, as a favourable mortgage market tempts renters into ownership, and falls in net migration take pressure off the rental system.

William Reeve, CEO at Goodlord, comments:

“Whilst prices will continue to go up, the underlying signs point to what could be the return of some equilibrium to the market. The lower pace of annual rental inflation, especially compared to last January, combined with lengthening voids may indicate the early signs of softening demand. With current rental inflation now sitting well below the CPI and wage growth, this could swing the pendulum over power slightly back towards tenants following several years of ferocious competition for properties.”

Rental Index methodology

The key changes include the introductions of the East of England and Yorkshire & The Humber. We have also made the catchment for our London data smaller to help provide an even more accurate picture of prices in the capital. This means some properties which would have previously been categorised as Greater London, will now be indexed under the South East. 

We have analysed 12 months of data (Jan 2025-Jan 2026) along these new regional boundaries to provide a refreshed set of metrics. Going forward these will provide the benchmarks used for month-on-month and year-on-year calculations.