UK Rents Dip as Landlords Brace for the Renters’ Rights Act

The UK rental market experienced a noticeable cooling in January 2026, with national average rents dropping by 1.1% month-on-month to £1,302. London, often a bellwether for rental trends, saw an even steeper decline of 2.4%, bringing the average rent in the capital to £2,078. This market shift comes just months before the first phase of the landmark Renters’ Rights Act (RRA) is implemented on 1 May 2026.

What’s Driving the Decline?

The rent drops suggest landlords are recalibrating expectations in anticipation of significant regulatory changes. Despite year-on-year rent growth still standing at 2.4% nationally and 2.6% in London, the pace is slowing, especially when compared to inflation (3.4% as of December 2025). Analysts expect advertised rents to climb only modestly—around 2%—over the course of 2026 due to ongoing supply constraints and increased legislative scrutiny.

Phase 1 of the Renters’ Rights Act: Big Changes Ahead

Phase 1 of the RRA, launching on 1 May 2026, introduces sweeping reforms aimed at strengthening tenant protections and improving stability in the private rental sector (PRS). Key features include:

Abolishing Section 21 "no-fault" evictions: Landlords must now rely on Section 8 grounds for eviction, requiring specific, often court-validated reasons.
Eliminating fixed-term tenancies: All tenancies will become open-ended, giving tenants more security and flexibility.
Limiting rent increases: Landlords may now raise rent only once every 12 months, with a minimum two months’ written notice, under Section 13 notices.
Banning bidding wars: Landlords or agents cannot pit prospective tenants against each other with escalating offers.
Ending discrimination: Tenants with benefits or children can no longer be declined purely on those grounds.

These changes are designed to level the playing field between renters and landlords, but they also mean increased diligence and administrative demands for property owners.

Preparing for a New Regulatory Landscape

Professional bodies and letting agents are urging landlords to get ahead of the changes:

Tenant Referencing: With open-ended tenancies and stricter eviction rules, vetting tenants—especially for income security—has become paramount.
Legal Compliance: Breaches of the new laws could result in civil penalties up to £7,000—or up to £40,000 for repeated or severe violations.

Landlords are also being advised to review management processes, from tenancy agreements to communication protocols, in light of heightened oversight.

What’s Next in 2026?

The RRA is just one component of a broader regulatory overhaul in the housing sector:

Phase 2 and 3 of the RRA will roll out later in 2026 and beyond, introducing a national PRS Database, redress through an independent Ombudsman, and Decent Homes Standard requirements under “Awaab’s Law.”
Social Housing Rent Standard from April 2026 allows increases up to CPI + 1%, with additional weekly rises for below-formula rents.
Leasehold Reforms will begin with a draft Bill aimed at making commonhold the norm for new flats and simplifying lease extensions.
EPC Regulations may require rental properties to reach a minimum ‘C’ rating by 2028-2030. Though implementation is uncertain, landlords should prepare now.
Tax Adjustments will include an expanded Making Tax Digital programme and increased withholding taxes on rental income and property interest, rising to 22% in April 2027.

Opportunities Despite Challenges

Although landlords face a more complex and demanding regulatory environment, the rental market remains fundamentally resilient. Structural demand from renters persists, underpinned by long-term supply challenges. Investor interest continues, particularly in well-located residential assets and the build-to-rent sector.

Yields remain stable and, for prepared landlords, the evolving system could offer better tenant relationships, less tenancy turnover, and more predictable rental income. With early 2026 prompting significant shifts in approach, the key will be adapting now for the changes just around the corner.

Need support navigating the Renters’ Rights Act? Reach out to a qualified property consultant or letting agent to ensure your portfolio complies—and thrives—in the new age of UK renting.