It's low enough that for a lot of people it doesn't really matter. I've got Prime and I've got a FireTV. Sometimes I just want to watch "something" and I'll pick from the "free" (included in my Prime subscription that I'd have anyway) selection. Sometimes I want to watch something a bit more specific, and it'll be a ~10 second impulse choice whether or not I think the rental price is worth it.

EDIT: Just browsed through my watchlist on Instant Video, and most of the titles on it are available for rental at GBP 3.49 or 4.49, but quite a few are not available to rent at all, and have purchase prices ranging from around 5 to 15 pounds. I'm going to assume that Amazon knows what pricing works for them, at least in aggregate.