Introduction
The UK rental market is entering a period of transformation, with slowing rent growth, increasing compliance demands, and sweeping regulatory reform set for 2026. For landlords, agents, and investors alike, understanding these shifts now is key to managing risk and finding opportunity. Here's what you need to know this week.
Cooling Rents – But Still Rising
Average rents in England stood at £1,214 in December 2025, up just 2.4% year-on-year—a clear sign of cooling compared to recent highs. In fact, rents are now 2.5% lower than in November and almost 19% below their July 2025 peak.
Void periods are also creeping up, now averaging 23 days (versus 21 a year ago), signalling more tenant choice and less urgency. With 2026 rental growth forecasts in the 2–2.6% range, landlords need to adopt smarter pricing and presentation going forward.
Major Legal Changes: Renters' Rights Act 2025–26
One of the most pressing issues this week is the Renters’ Rights Act (RRA), which was passed in October 2025 and will begin rolling out in May 2026. The impact on tenancies will be sweeping:
Key Changes from 1 May 2026 (Phase 1):
- End of Section 21 "no-fault" evictions. Landlords must now rely on Section 8 grounds, such as tenant breach, landlord selling, or returning to live in the property.
- End of fixed-term ASTs. New tenancies will be open-ended periodic tenancies—tenants can leave with two months' notice.
- Rent increases and review clauses: Contractual rent review clauses will no longer be valid. Rent rises can be contested at the First-tier Tribunal, which will set a fair market rate.
Key Dates to Watch:
- January 2026: Publication of detailed RRA regulations.
- March 2026: Expected release of the mandatory tenant information sheet.
- 30 April 2026: Final day a Section 21 notice can be served.
Compliance Pressures & Enforcement Crackdown
From December 2025, local authorities gained powerful new enforcement tools, including:
- Ability to demand records and inspect with fewer barriers
- Access to third-party data
- Higher penalties with a 12-month retrospective window
Landlords are strongly advised to tighten documentation now—focusing on right-to-rent checks, gas and electrical safety, deposit protection, and EPC compliance.
EPC and Energy Efficiency Reform
While still awaiting official government response, proposals are in place to require a minimum EPC rating of C for:
- New tenancies by 2028
- Existing tenancies by 2030
Surveys suggest over 50% of landlords are preparing to upgrade, with nearly a third expecting to spend £5,000 or more. Clarity on spending caps and EPC methodology is urgently needed, but planning ahead will be crucial.
Financial Planning: Tax and Record-Keeping
The rollout of Making Tax Digital (MTD) continues, with a push this week for landlords to begin adopting digital record-keeping and quarterly submissions. Waiting too long could result in unnecessary administrative pressure (or penalties!) down the line.
Market Outlook: Risk, Opportunity & Landlord Exit Trends
With slower rent growth, longer void periods, and rising compliance costs, yields are under pressure. Analysts predict a potential acceleration in landlord exits in 2026, shifting rental stock toward institutional investors and possibly tightening supply in high-demand areas.
For cash-rich investors, softer winter rents and a sluggish sales market may present buying opportunities before the seasonal summer rental surge.
What Landlords Should Do Now
1. Audit Tenancy Agreements
Begin transitioning to periodic tenancy templates without contractual rent review clauses.
2. Prepare for Tribunal-Based Rent Setting
Start building rent evidence files to support any future rent adjustments.
3. Get Compliance Audit-Ready
Ensure all safety certificates, landlord registration, deposit protection, and EPC records are in order ahead of heightened inspections.
4. Plan Spending for EPC Upgrades
Get quotes and evaluate options for improving energy efficiency before regulations become mandatory.
5. Go Digital for Tax
Familiarise yourself with Making Tax Digital and begin setting up compliant accounting processes to avoid last-minute scrambles.
Final Thoughts
The next 18 months could reshape the UK rental landscape. While regulatory challenges abound, proactive planning and strategic investment can help landlords weather changes and potentially thrive in a tighter, more professionalised sector.
Stay informed. Act early. And always stay compliant.