UK Rental Market in 2026: What Landlords and Investors Need to Know
As 2026 begins, the UK rental sector is facing a unique combination of seasonal slowdown, tightening regulation, and long-term structural shifts. From cooling rental growth and regulatory reform to renewed investor scrutiny, this is a critical period for landlords, letting agents, and property investors to stay informed and adapt.
Cooling But Resilient Rental Market
The latest data from Goodlord (via Landlord Knowledge) shows that average rents in England rose around 2–2.4% year-on-year in December 2025. This marks a notable cooling from the 4.6% annual increases earlier in 2025 and 3.3% seen in December 2024. Month-on-month, December rents fell by 2.5%, reflecting normal seasonal softness.
Void periods also ticked up slightly to an average of 23 days, compared to 21 days the previous December—another seasonal trend. Nonetheless, rents remain about 19% below their July 2025 peak, indicating potential for recovery later in the year.
Regional variation was evident: the South West saw the steepest monthly decline in rents (-4%), while the North West bucked the trend with a slight rise (+0.3%). Despite current softness, the fundamental supply–demand imbalance persists, and many commentators expect rental growth to rebound in the latter half of 2026, particularly if landlord numbers fall.
The Renters’ Rights Act: A New Era for Tenancy Law
The Renters’ Rights Act (RRA), which received Royal Assent in October 2025, ushers in the biggest reform to tenancy law in a generation. Its phased rollout begins with Phase 1 on 1 May 2026, bringing immediate implications for day-to-day property management:
- Section 21 “no fault” evictions will be abolished, alongside fixed-term assured tenancies. All new tenancies will be open-ended periodic agreements.
- Landlords will need to use Section 8 possession grounds, including serious tenant breach, intention to sell, or need to move back in.
- Rent review clauses in contracts will be invalid, with tenants given the right to challenge rent hikes through the First-tier Tribunal, which can reset rent to a tribunal-defined “market rate.”
Key upcoming dates include:
- January 2026 – publication of RRA implementation regulations.
- By 30 April 2026 – the last day to serve a valid Section 21 notice.
- March 2026 – expected release of the mandatory tenant information sheet.
Letting agents and landlords alike must start preparing operational changes now, especially as local authorities have been granted stronger enforcement powers from December 2025. These include greater inspection access, wider data rights, and the potential for steeper penalties.
What’s Next? Regulatory Pipeline in Focus
Beyond Phase 1, the Rest of the RRA rollout will come in phases:
- Phase 2 (late 2026): Launch of a National PRS Database and a PRS Landlord Ombudsman, enhancing compliance monitoring and tenant protection.
- Phase 3 (timing TBD): Introduction of a Decent Homes Standard and Awaab’s Law, mandating faster resolution of serious hazards like damp and mould.
Meanwhile, landlords are still awaiting final government decisions on EPC regulation updates, which may require rentals to reach at least EPC band C by 2028 (new tenancies) and 2030 (existing). Sector voices continue to urge clarity on spend caps, exemption criteria, and revised EPC methodology.
The compliance burden is also set to increase with Making Tax Digital (MTD) requirements, which will change how many landlords manage and report income.
Investment Outlook: Risks and Opportunities
Commentators project modest rental growth nationally in 2026—around 2.5–2.6%—consistent with current trends. Yet the regulatory overhaul may spark a deeper market shift: surveys suggest 39% of landlords are considering exiting the sector, potentially tightening future supply and boosting rents and capital values for remaining participants.
For buy-to-let and build-to-rent investors, winter 2025/26 offers a potential window for acquisitions at relatively soft rent and asking price levels. However, success will depend on adapting to the new legal framework and navigating higher compliance costs.
Final Thoughts
The UK rental landscape in 2026 combines transitional uncertainty with long-term opportunity. For landlords and investors ready to adapt, the evolving market offers the chance to future-proof portfolios and strengthen operating models—provided they stay ahead of new rules, tenant expectations, and enforcement standards.
As we move through the year, closely monitoring tenancy reforms, local compliance risks, and tenant demand trends will be essential. Whether you're repositioning a portfolio or entering the rental market, now is the time to prepare for the new era of renting in the UK.