UK Rental Market in 2026: Slower Growth, Rising Regulation

As we move into 2026, the UK rental and broader property market is transitioning into a slower-growth but more heavily regulated era. This blog takes a comprehensive look at what landlords, investors, and property professionals need to know in the face of moderating rents, stabilising demand, and major legislative changes.

Rents Are Growing—But at a Calmer Pace

Rental prices are still on the rise, but they’re moving at a gentler pace than in previous years. In December 2025:

Average monthly rents in England reached £1,214, a 2.4% year-on-year increase.
This compared to 4.6% annual growth at peak levels earlier in 2025.
Month-on-month, rents fell by 2.5%, a seasonal dip that also reflects an easing in tenant demand.

Void periods are also ticking up slightly:

In December 2025, average void periods were 23 days, up from 21 days a year earlier.

This shifting landscape highlights the importance of realistic pricing and high property presentation standards, especially in early 2026.

Tenant Demand Remains Strong—But It's Easing

While tenant demand remains above pre-pandemic levels, it is moderating due to several structural trends:

Falling net migration is reducing pressure in some local rental markets.
First-time buyer activity is improving, driven by lower mortgage rates, shifting some demand from renting into ownership.

Looking ahead, leading analysts such as Zoopla, Savills, and Leaders forecast rental growth of around 2–2.5% for 2026, marking a return to a more stable and sustainable market rhythm.

2026: A Year of Major Regulation for Landlords

The regulatory landscape for landlords is shifting dramatically this year. Key developments include:

The Renters’ Rights Act (RRA) - Phase 1 from May 2026

Abolition of Section 21 “no-fault” evictions. All possession claims must now follow Section 8 grounds with specified criteria (e.g., intent to sell).
End of fixed-term tenancies: Most new tenancies will move to open-ended periodic agreements.
Rent reviews:

- Contractual rent review clauses become invalid.

- Landlords must follow statutory notice procedures.

- Tenants can challenge increases at the First-tier Tribunal, which will establish a ‘market rent’.

These changes are likely to produce administrative challenges and increase caseloads at tribunals.

Upcoming Reforms (Phases 2 & 3)

A National PRS Database and Landlord Ombudsman are expected by late 2026.
Future standards will apply the Decent Homes Standard to private rentals and incorporate elements of Awaab’s Law (faster action on serious hazards).

Tax and Compliance Changes in 2026

Making Tax Digital for income tax comes into play, requiring digital reporting of rental income.
Continued uncertainty around energy-efficiency rules could necessitate capital investment in rental properties.

The cumulative burden of these changes may drive smaller or highly leveraged landlords to exit the market, with potential implications for rental supply and pricing.

Purpose-Built Student Accommodation (PBSA) Exemptions

Not all segments are equally affected by the RRA. PBSA landlords are exempt from some of the act’s restrictions, including the abolition of fixed-term tenancies. However, they must adhere to an approved national code of practice (e.g., ANUK/Unipol) to retain these exemptions.

What This Means for Landlords and Investors

Landlords:

Prepare now for RRA Phase 1 by updating tenancy templates, rent increase processes, and possession strategies.
Anticipate longer void periods and modest rent growth in the months ahead.
Expect more tenant enquiries and challenges around rent increases and tenure rights.

Investors:

Adjust assumptions for 2–2.5% rental growth over the near term.
Incorporate rising compliance costs and clearance metrics into cash flow models and stress-testing.
Institutional appetite remains high in the “living sector,” but portfolio resilience to regulation and ESG standards is increasingly critical.

A Market Rebalancing Underway

With tenants gaining more rights, landlords facing new responsibilities, and the market entering a more disciplined growth phase, 2026 will test strategies across the sector. Whether you're adjusting pricing, preparing for new legal duties, or recalibrating investments, staying ahead of these trends will be key to success.

Want a tailored checklist based on your role or region? Let us know and we’ll provide one.