Navigating the 2026 Rental Market: What UK Landlords and Tenants Need to Know

As the UK rental landscape enters 2026, significant shifts in legislation, market dynamics, and government policies are poised to reshape the experience for both landlords and tenants. Whether you're an investor, letting agent, or renter, here's a comprehensive breakdown of what to expect in the year ahead.

Slower Rental Growth Amid Changing Tenant Demand

Rental growth across the UK is expected to ease to around 2.5–2.6% in 2026. This deceleration reflects several key trends:

Weakened wage growth: Projected at below 3% annually, limiting renters’ ability to absorb higher rents.
Softening tenant demand: Down by 20% outside London compared to last year.
Improved mortgage affordability: More tenants are transitioning into homeownership, easing demand pressures.

Despite these factors, rental inflation may still find support due to housing supply constraints.

Ongoing Supply Constraints and Landlord Exodus

Long-term supply remains a pressing concern:

There are 33% fewer rental homes available today compared to a decade ago.
In suburban areas, supply has dropped by 31% since 2018.

These figures reflect the impact of tax reforms (such as Section 24) and rising regulatory burdens. In fact, an estimated 39% of landlords are considering exiting the market altogether. Should this trend continue, rents could face upward pressures — though any spikes are likely capped by affordability limits.

The Renters’ Rights Act: Landmark Reforms Begin May 2026

England’s rental regulations will undergo sweeping changes from 1 May 2026 under the Renters’ Rights Act. Here's what to expect:

Phase 1 (Effective May 2026)

End of fixed-term tenancies: New agreements will default to rolling assured tenancies.
Section 21 abolished: Landlords must now use Section 8 for all evictions.
Rent increases limited: May occur only once per year via Section 13.
Discrimination ban: Landlords cannot reject tenants based on benefit status, children, or pets (unless reasonable grounds are provided).
Ban on bidding wars: Tenants cannot be forced to outbid each other.
Enforcement: Civil penalties up to £7,000 and criminal charges up to £40,000.

Phase 2 (Late 2026)

Launch of national Private Rented Sector (PRS) Database.
Establishment of an independent Landlord Ombudsman to resolve disputes and enhance transparency.

Phase 3 (Post-consultation)

Implementation of the Decent Homes Standard.
Introduction of Awaab’s Law to improve rental property conditions.

Upcoming Leasehold Reform

The coming Leasehold and Freehold Reform Bill, set to be drafted in early 2026, will target systemic changes:

Commonhold as default for all new flat developments.
Capping of ground rents.
End to forfeiture for minor lease breaches.
Easier leasehold extension processes.

These updates will further simplify and modernise property tenure across ownership models.

EPC Upgrades and Tax Changes: Prepare Now

With net-zero goals in mind, the timetable for Energy Performance Certificate (EPC) upgrades remains on track:

All new tenancies must meet EPC rating C by 2028.
Existing tenancies must comply by 2030.

Initial research reveals that 55% of landlords may need to upgrade, with 29% expecting costs to exceed £5,000. Clarifications on cost caps and exemptions are expected following current consultations.

Meanwhile, the rollout of Making Tax Digital continues, requiring landlords to modernise their financial recordkeeping and digital submission processes.

Social Housing and Rents: Stability for a Decade

The government has introduced a 10-year rent settlement for social housing providers (CPI + 1%). From April 2027, providers can also increase below-formula social rents by:

£1 per week (2027)
£2 per week (2028)

This long-term certainty aims to boost housing association investment, ahead of bidding for the upcoming Social Affordable Housing Programme (SAHP) in February 2026.

Final Thoughts

As 2026 unfolds, the UK rental property sector is entering a period of transformation. While tenants are set to benefit from stronger protections and standards, landlords will need to navigate increasing compliance demands, shifting market dynamics, and the ongoing pressure of regulatory reform. Strategic planning, early adaptation, and legal awareness will be key to staying ahead in a tighter, more transparent rental market.

Stay tuned for more updates as further details on the Renters’ Rights Act, EPC requirements, and Leasehold Reform emerge later this year.