A New Landscape for UK Rentals in 2026
The UK property rental sector is entering 2026 with a mix of stabilising rent growth, evolving tenancy structures, and major regulatory updates that landlords, agents, and investors cannot afford to ignore. From lengthening void periods to the phased rollout of the Renters’ Rights Act 2025 (RRA), early 2026 is already setting the tone for significant transformation across the industry.
Cooling Rents — But Still Up Annually
Goodlord’s December 2025 Rental Index reveals that average new-let rents across England now stand at £1,214, marking a 2.4% increase year-on-year — though notably down from the 4–5% growth rates earlier in 2025. On a monthly basis, rents dropped 2.5% in December, reflecting both seasonal trends and a temporary dip in tenant activity during the winter months.
The South West saw the sharpest monthly drop (-4%), while the North West defied the national trend with a modest 0.3% rise.
Voids Lengthen — Presentation and Pricing Now Key
Void periods averaged 23 days in December — slightly down from November but longer than the 21-day average seen a year ago. Regions like the South East and North West experienced increased void lengths, highlighting the growing importance of competitive pricing and presentation, particularly outside key urban centres.
Despite these shifts, tenant demand remains robust, but landlords are seeing yields squeezed by higher operational costs and incoming regulatory changes. Industry sentiment points to further landlord exits in 2026, tightening supply and potentially pushing rents upward again by mid-year.
The Renters’ Rights Act 2025 — Phase 1 Begins May 2026
The Renters’ Rights Act 2025 (RRA) will roll out in phases beginning 1 May 2026, marking one of the most consequential transitions for the UK private rental sector:
Key Phase 1 Changes:
- Section 21 “no-fault” evictions abolished.
- All new tenancies must be open-ended periodic; fixed-term assured tenancies will become a thing of the past.
- Tenants can give notice at any time with 2 months’ notice.
- Landlords must use Section 8 grounds (e.g., to sell or occupy) for possession.
- Rent increases are now restricted to once per year, with 2 months’ statutory notice required under Section 13. Contractual rent review clauses will no longer be valid.
- Tenants have the right to challenge increases at the First-tier Tribunal, which will set a market-aligned rent from the decision date.
Coming Later in 2026:
- National PRS Database and a Landlord Ombudsman scheme are expected to launch by late 2026.
- Subsequent consultation will shape a PRS Decent Homes Standard and new health & safety obligations under an "Awaab’s Law" framework.
PBSA Exemption:
Purpose-built student accommodation (PBSA) is exempt from certain provisions — most notably, they may continue offering fixed-term contracts, provided they meet regulatory code standards.
Wider Policy Shaping the Market
Several national policies introduced or pending in 2026 will particularly affect landlords, developers, and investors:
Building Safety Levy
From 1 October 2026, a new Building Safety Levy will apply to most new residential schemes of 10+ units. Developers must account for this in their financial models.
Leasehold & Commonhold Reform
A pending bill proposes:
- Ending new leasehold houses.
- Making commonhold the default for flats.
- Caps and reforms on ground rents and major works costs.
Planning System Reforms
A new Planning & Infrastructure Bill aims to streamline approvals and unlock development sites. Meanwhile, revised London Plan Guidance could expedite affordable housing delivery in the capital (currently in consultation through Jan 2026).
Taxation for Non-Resident Landlords
From April 2027, withholding tax on rental income and interest for non-resident landlords is set to rise to 22%, making tax planning and relief-at-source mechanisms increasingly important.
Looking Ahead: What Should Landlords and Agents Do Now?
With void periods slightly higher and seasonal rent drops shaving nearly £3,384 per year off the average tenancy's value compared to summer peaks, now may be an opportune time to re-list units while tenant demand begins to recover in January.
Key Actions for Early 2026:
- Update tenancy agreements to ensure compliance with the coming transition to periodic arrangements.
- Redraft rent review clauses and processes by May 2026 to comply with statutory limits.
- Prepare for an evolving Section 8 possession strategy, documenting evidence and appropriate grounds.
- Assess your property standards and maintenance regime ahead of compliance with Decent Homes and Awaab’s Law provisions.
- Investors should reassess portfolio viability, as valuation trends will increasingly reflect professionalism, compliance, and regulation-readiness.
Final Thoughts
While slowing rent growth brings temporary relief for tenants, long-term shortages, persistent demand, and landlord exits could prop the market back up. Combined with the sweeping reforms set to land in 2026, it’s clear that a proactive, compliance-first approach will be key to stability and success for landlords and investors in the months ahead.
Want a tailored briefing for your role as landlord, agent, or investor? Get in touch and we’ll prepare a one-pager focused on what you need to know this week.