Rents reach highest-ever level relative to earnings, driven by lack of housing supply

More people in the UK are renting, and they're paying a growing share of their income to do so.

Rents reached 36.1% of average earnings in March 2025 - their highest level on record - according to the latest detailed annual review produced by the Chartered Institute for Housing.

Demand for private rentals increased during the COVID pandemic and continued to rise as higher inflation and interest rates from 2022 made homeownership less affordable.

At the same time, the supply of new rental properties has fallen. Higher mortgage rates and recent tax changes for landlords, including increases to capital gains and income tax, have also led some smaller landlords to exit the market.

The Royal Institution of Chartered Surveyors (RICS) reports that tenant demand continues to outstrip the available supply of rental properties in the UK, with a "subdued" flow of new listings advertised.

Tarrant Parsons, RICS head of market research and analysis, told Sky News: "Demand growth from tenants has eased in recent months, and some data shows more rental properties on the market than a year ago.

"Even so, the supply of rental homes remains well below pre‑pandemic levels. The RICS survey continues to report negative landlord instructions, indicating a shrinking flow of landlords entering the market. With the Renters' Rights Act due to take effect in May, there's a risk that regulatory changes accelerate this decline."

Mr Parsons added: "With supply unlikely to improve meaningfully soon, tenants in many areas will continue to face significant affordability pressures."

See if your town has had one of the largest rent rises in the table below:

Long-term impact of Right to Buy

The latest UK Housing Review reveals the long-term impact of the Right to Buy policy, which enables social tenants to buy their homes at a discounted price.

"Right to Buy has been very important in helping people access and buy their own homes," Gavin Smart, chief executive officer of the Chartered Institute of Housing, told Sky News. "But you can't have the Right to Buy scheme without also paying attention to the consequences for the social rented sector and for replacing the homes that are lost.

The report's authors argue that, over time, the biggest factor in rising rents has been the huge loss of social housing across the UK, with the sector shrinking from 31% of all households in 1981 to just 17% today.

Since 1981, 2.8 million homes have been sold under Right to Buy, up to March 2025. Only around 1.2 million of those homes have been replaced, resulting in an overall shortfall of 1.6 million homes.

Sky News analysis finds that Right to Buy sales have likely continued to outpace social housing replacement in recent months.

In the first nine months of 2025-26, management data indicates that just under 11,000 local authority homes have been sold through Right to Buy, equivalent to a projected total of 15,000 for the full year.

This is compared to 12,198 social homes built in the latest year.

'Affordability crisis'

Right to Buy sales are likely to decrease in the future following rule changes under Labour, which have reduced the discount for buyers and which "strikes a better balance", said Mr Smart.

However, there is still an urgent need to grow the overall number of homes in the UK, especially the supply of "the most affordable social rented homes", he added.

This is because the overall decline in social housing has created competition for private tenancies and an "affordability crisis" in the sector for people who cannot afford to buy their own home.

"This particularly affects people who are renting in the private rented sector, and especially those who are supported by benefits to meet their rents," Mr Smart said.

Around 40% of homes sold through Right to Buy are now privately rented, often at significantly higher rents than social housing levels.

This shift has contributed to increased government spending on housing benefits and left many households in less secure and, on average, poorer-quality accommodation, the report says.

'Good landlords have nothing to fear'

A Ministry of Housing, Communities and Local Government spokesperson said: "For too long, social homes have been sold off without being replaced, which is why we're overhauling Right to Buy to better protect housing stock and ensure money from sales is reinvested in new social homes.

"This is alongside our £39bn investment kickstarting the biggest boost to social and affordable housing in a generation.

"There is also no evidence of an exodus of landlords leaving the rental sector due to our Renters' Rights Act, and good landlords have nothing to fear from these reforms."

'Once rents go up, they stay up'

While rent increases in some areas have started to slow, the director of flatshare site SpareRoom, Matt Hutchinson, told Sky News that, unlike other expenses like energy, "once rents go up, they stay up".

"They may creep up and down a tiny bit, but they don't come back down in any meaningful chunk. At the same time, people's salaries aren't going up; the cost of living has gone up," he said.

"There is a constant imbalance in the supply and demand numbers, and that will always be the case unless we somehow work out how to create more housing."

The flatshare website has recorded larger rent rises in northern England, the Midlands and Scotland in the latest year to December 2025 - concentrated in towns and smaller cities as people seek cheaper rents in suburban areas.

The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.

(c) Sky News 2026: Rents reach highest-ever level relative to earnings, driven by lack of housing supply