Rent Reform and Slowdown: What 2026 Holds for UK Landlords and Tenants
As the UK private rented sector steps into 2026, both landlords and tenants are navigating a dynamic landscape shaped by economic trends, shifting supply and demand, and the most significant shake-up in rental legislation for a generation—the Renters’ Rights Act (RRA).
Cooling Rental Growth Across the UK
After a period of rapid rental inflation, growth is finally beginning to slow. The average UK monthly rent rose by 4.0% across 2025, reaching £1,368. This marks a slowdown from the previous month’s 4.4% growth. Regionally, rent inflation varied widely:
- North East: +7.9% (highest regional growth)
- London: +2.1% (lowest growth)
- England overall: +3.9% to an average £1,424
Looking ahead, rent growth is forecast to decelerate further in 2026, with increases estimated at just 2–2.5%. Several factors are easing pressure on rents:
- A 15% year-on-year increase in rental property supply
- A 20% drop in tenant demand outside of London
- Wages growing at under 3%, limiting tenants’ rental budgets
- Improved first-time buyer activity, drawing some tenants away from the rental sector
The Renters’ Rights Act: A New Era for Renting
The Renters’ Rights Act (RRA), which received Royal Assent in October 2025, will begin phased implementation from 1 May 2026. This landmark legislation is set to transform lettings in England with a strong focus on tenant rights and housing standards.
#### Phase 1 (from May 2026):
- Ends Section 21 "no-fault" evictions
- All new tenancies become periodic (open-ended and rolling)
- Tenants must give 2 months' notice to leave
- Landlords must rely on Section 8 grounds to evict, such as rent arrears, breaches of agreement, intent to sell, or a need to move in
- Rent increases capped at one per year, limited to market rates, with tenants able to challenge rises through the First-tier Tribunal
- Contractual rent review clauses become unenforceable
#### Phase 2 (expected late 2026):
- Launch of a national Private Rented Sector (PRS) Database
- Introduction of a PRS Landlord Ombudsman for dispute resolution and compliance oversight
#### Phase 3 (post-consultation):
- Implementation of a Decent Homes Standard
- Enforcement of Awaab’s Law to improve conditions and safety in rental properties
Notably, Purpose-Built Student Accommodation (PBSA) remains exempt, allowing fixed-term contracts in line with academic calendars under registered sector codes.
Landlords should review and adjust their portfolios now, as non-compliance with the RRA will bring penalties once the Act goes live.
House Prices and Market Sentiment
Separate from the rental space, house prices rose 2.5% annually to November 2025, reaching £271,000 nationwide. England saw a 2.2% rise to an average of £293,000. While sales volumes are improving, new builds see more price revision uncertainty. Still, early 2026 is showing signs of a housing market recovery, supported by post-Budget optimism and sustained buyer demand outpacing supply.
Key Takeaways for 2026
- Slower rent growth may ease pressures on tenants, but yield compression may concern landlords.
- Legal restructuring under the RRA requires prompt landlord attention to tenancy agreements, notice periods, and rental review clauses.
- Supply-demand dynamics are shifting—landlords may face tougher competition amid increased rental stock and more active first-time buyers.
Whether you’re a landlord preparing portfolios for compliance or a tenant understanding your new rights, staying informed will be crucial to navigating 2026’s evolving rental landscape successfully.