Tenant demand has dropped by 17% year-on-year and is now running 28% below 2019 levels as falling mortgage rates make homeownership increasingly attractive for those renting, says Aneisha Beveridge (pictured), Head of Research at Hamptons.

Data from Hamptons’ Monthly Lettings Index reveals it is the twelfth consecutive month in which tenant demand was lower than the previous year, with 63% of Hamptons’ lettings branches reporting fewer tenant registrations in May.

Cooling demand

The company says that cooling demand is now reducing rental growth. Average rents on newly let properties rose just 1.5% in the 12 months to May 2025, down from 5.1% growth in May 2024 – a reduction of nearly two-thirds.

Beveridge says: “It has taken the best part of two years for the pace of rental growth to fall from double digits down to 1.5%. This suggests that the era of rapid rental growth is behind us for now.”

Surge in first-time buyers

The index also reveals that, for the first time in at least a decade, both London and Scotland have seen more first-time buyers looking to buy than tenants looking to rent, and the ratio of tenants to first-time buyers has nearly halved since mortgage rates peaked in 2022-23.

According to Hamptons, anyone with a deposit of at least 10% is now likely to find themselves better off buying than renting, and the situation is even more pronounced in affluent areas.

Lower mortgage rates are changing the arithmetic for tenants who are thinking about buying.”

Beveridge says: “Lower mortgage rates are changing the arithmetic for tenants who are thinking about buying. Three years of above-inflation rental growth mean that for most, buying remains cheaper than renting.”

But she adds that rental growth is: “Unlikely to cool much further” as landlords continue to price in political risk from the incoming Renters’ Rights Bill.