UK Property Market 2026: What Landlords Need to Know Right Now

As we settle into the new year, the UK property market is adapting to a more regulated and demand-sensitive environment. With rental trends shifting, key legislative reforms about to come into force, and broader economic changes reshaping investor strategies, it’s critical for landlords, agents and investors to stay informed. Here’s what’s happening—and what it means for you.

Slower Rent Growth and Longer Voids Define the Start of 2026

The latest data from the Goodlord Rental Index (January 2026) reveals a cooling rental market across England. While average rents remain higher than a year ago—rising between 2% and 2.4% annually in December 2025—that’s down from 3.3% annual growth last year and far below the 4.6% seen in early 2025.

Regionally, rents fell by 2.5% from November to December, with the South West posting the steepest monthly drop at 4%. The North West stood out as the only region seeing a modest increase (0.3%). Typical void periods have also nudged up to 23 days—up two days on last year—suggesting a more price-sensitive tenant base and a slower rental cycle outside the biggest cities.

Outlook for 2026: Analysts are predicting rent growth of about 2–2.5% in 2026. This ‘calmer’ outlook reflects falling net migration and a shift in tenant behaviour, including more first-time buyers leaving the rental market. That said, ongoing supply constraints mean the balance could quickly shift if landlords exit or reduce portfolio sizes.

Renters’ Rights Act 2025: Major Changes From 1 May 2026

The Renters’ Rights Act 2025 is set to reshape the legal and operational landscape for private landlords. Phase 1 of the new rules kicks in from 1 May 2026, and it’s essential to prepare now.

Key Changes Coming in May:

Section 21 abolished. This removes ‘no-fault’ evictions. Landlords must now use Section 8 grounds (breach, sale, landlord moving in, etc.) to regain possession.
Open-ended tenancies. Fixed-term contracts are out; all new tenancies will be periodic by default.
Tenant notice periods: Tenants can leave with 2 months’ notice at any time.

Rent Increases Under New Rules:

Landlords may increase rent only once every 12 months.
They must give two months’ written notice using the formal Section 13 process.
Contractual rent review clauses will be invalid. Tenants can challenge hikes at the First-tier Tribunal, which will then set a fair-market rent.

What’s Next in Later Phases:

Phase 2 (late 2026): A national PRS Database and Landlord Ombudsman to resolve disputes and enforce compliance.
Phase 3 (TBC): New Decent Homes Standard and health & safety rules inspired by Awaab’s Law.
Exemption: Purpose-built student accommodation (PBSA) may continue using fixed-term agreements if they follow approved standards.

Landlord Reaction: Trade bodies including the NRLA warn these changes may push more landlords to exit the sector, risking a further squeeze on rental homes.

Modest House Price Growth, but Portfolio Planning Is Crucial

The sales market also enters 2026 with a reset tone. Analysts expect house prices to grow modestly, supported by improving affordability (via slightly lower mortgage rates) and better finance availability for first-time buyers.

Key structural factors include:

Falling net migration, which is softening rental demand.
First-time buyer growth, reducing the reliance on rental housing in some areas and putting different pressures on yields.
Transaction levels picking up slightly after the slowdown of 2023–24.

For landlords, this means staying profitable isn’t just about rising rents. In 2026, strategic asset selection, realistic pricing, and professional-grade management will be paramount in maintaining yields and avoiding extended voids.

Tighter Regulation and Tax Changes Ahead

2026’s policy calendar is packed with reforms that will reshape the private rental sector:

Renters’ Rights Act Phase 1 (May 2026): As detailed above.
Making Tax Digital for Income Tax: Expanding to include more landlords, requiring digital record-keeping and new reporting obligations.
Energy efficiency initiatives: Continued lobbying and consultations could lead to tighter EPC and warm-home standards this year.

Analysts are predicting that regulatory pressures in 2026 could spur a sector-wide repositioning:

Smaller or over-leveraged landlords might exit the market.
Larger, better-capitalised investors and institutional landlords could expand their market share.
Rental stock sold off by individuals may become owner-occupied, limiting any increase in rental supply.

Final Thoughts

2026 is shaping up to be a pivotal year for UK landlords. With major legislative changes in motion, slowing rental growth, and increasing market scrutiny, staying agile and informed is your best strategy.

Whether you’re a seasoned investor or a first-time landlord, it’s crucial to start preparing now—particularly for the May 2026 tenancy law reform deadline. Smart asset choices, proactive compliance, and a focus on long-term tenant satisfaction will define success in the new rental landscape.

Stay tuned for more updates and in-depth analysis as the year unfolds.