BLOGS

The Act has landed — and the market is adjusting

When the Renters' Rights Act received Royal Assent in May 2025, it marked the most significant overhaul of England's private rented sector in a generation. The abolition of Section 21 "no-fault" evictions, the introduction of a mandatory landlord register and ombudsman, new Decent Homes Standards for private rentals, and restrictions on in-tenancy rent increases to once annually all fundamentally altered the landlord–tenant relationship.

Scotland had already led the way — its equivalent protections under the Private Housing (Tenancies) (Scotland) Act 2016 removed the ability to evict tenants without grounds years earlier — giving English policymakers a live test case to study. Wales, too, has progressively tightened the regulatory environment under Renting Homes (Wales) Act 2016 provisions. Northern Ireland's private rental regulation remains less stringent, though reform discussions are ongoing.

The question the market has been asking ever since the English legislation passed is simple: did it work — and for whom?

Supply: the feared collapse did not materialise — but the recovery is fragile

The most widely cited risk ahead of the Act was a wave of private landlord sell-offs, shrinking an already constrained rental pool and pushing rents even higher. That scenario has not fully played out.

Data from Rightmove and Zoopla through mid-2026 shows rental stock listings running meaningfully above their 2022–23 lows, when the post-pandemic demand surge and rising mortgage costs triggered a severe supply squeeze. While inventory remains below pre-2020 norms in most regions, the direction of travel has stabilised. REalyse data on active rental listings across major UK districts similarly points to a gradual broadening of available stock, with outer London boroughs, Greater Manchester, and parts of the East Midlands seeing the most notable replenishment.

Several dynamics explain why the mass exit of private landlords has, so far, been more of a trickle than a flood. Many landlords who intended to sell have already done so — the adjustment was front-loaded between 2022 and 2024, as rising interest rates and the phased removal of mortgage interest tax relief eroded returns. Those who remain are predominantly mortgage-free or have restructured their portfolios. The Act added compliance costs and reduced flexibility, but for this cohort, it did not fundamentally change the economics of staying in the market.

That said, the supply recovery is uneven. Smaller towns and rural areas — where individual buy-to-let landlords dominate and institutional alternatives are sparse — continue to show tight availability. REalyse planning pipeline data suggests that Build-to-Rent development remains heavily concentrated in England's major urban centres, leaving secondary markets underserved.

Rents: broad-based growth, moderating but persistent

If supply has stabilised, why do rents keep rising? The answer lies in the demand side of the equation.

The ONS Private Rental Price Index for the twelve months to May 2026 shows annual rental inflation running at approximately 4–5% across Great Britain — a notable moderation from the 10%–11% peaks recorded in 2022 and early 2023, but still comfortably above general CPI inflation and well above wage growth for lower-income households. Critically, this growth is broad-based: every English region, Scotland, and Wales recorded positive annual rent increases in the period, with no area yet returning to flat or falling rents.

London averages for newly listed two-bedroom flats now regularly exceed £2,200 per month in inner boroughs, according to Rightmove data, with some sought-after zones approaching £2,500. Outside the capital, Zoopla's UK Rental Market Report places average monthly rents for new tenancies in the £950–£1,150 range across major regional cities — Birmingham, Leeds, Bristol, Manchester — with Bristol and Edinburgh at or above the upper end of that band.

REalyse comparables data reinforces this picture at a more granular level. Across a sample of postcode districts in South East England and the West Midlands, achieved rents on new tenancies are tracking 3–6% above the same period last year, with gross yields for standard two-bedroom flats holding in the 4.5%–6.5% range — below the peaks seen in cheaper northern markets but still attractive against alternative income-generating assets in the current rate environment.

The Act's restriction on mid-tenancy rent increases to once per year — with a mandatory market-rate evidence standard — is beginning to influence landlord behaviour. Some landlords are front-loading asking rents at the start of new tenancies to build in a buffer, a dynamic Rightmove has flagged in its quarterly rental tracker. This may be contributing to the persistence of elevated asking rents on newly listed properties even as turnover slows.

Build-to-Rent: institutional confidence holds, pipeline grows

If the Act created uncertainty for individual buy-to-let landlords, it has done the opposite for institutional Build-to-Rent (BTR) operators. Large-scale operators — who already operate formal tenancy management, compliance frameworks, and professionally managed maintenance — are structurally better placed to absorb the new regulatory environment. For many BTR funds, the Act represents a levelling-up of standards that brings the wider market closer to what they already deliver.

The UK BTR pipeline remains robust. According to the British Property Federation and Savills, there were over 115,000 BTR units under construction or in planning across the UK by early 2026, with the majority in Greater London, Manchester, Birmingham, and Leeds. REalyse planning data identifies a significant volume of residential schemes in these districts carrying use class descriptions consistent with Build-to-Rent or co-living developments, with planning permissions granted or pending across a range of ward-level geographies.

Rental yields achievable by institutional operators — benefitting from scale, lower void rates, and lower per-unit management costs — are supporting continued capital deployment into the sector. Gross yields on stabilised BTR assets in regional cities are reportedly tracking in the 5%–7% range, underpinning investment cases even as financing costs have remained elevated by historical standards.

There are caveats. Viability pressures — principally construction cost inflation and planning delays — are slowing delivery timelines. Some schemes approved in 2022–2024 are only now breaking ground or entering the later development stages. The gap between planning approval and completed, lettable stock remains wide, meaning the pipeline's contribution to supply relief is still largely ahead of us.

Tenant protections: meaningful progress, structural gaps remain

From a tenant perspective, the Renters' Rights Act has delivered tangible improvements. The removal of no-fault evictions in England gives renters greater security of tenure — a change that tenant advocacy groups had campaigned for over a decade. The requirement for landlords to register on a new national property portal and belong to a redress scheme raises the floor on standards. The right to request a pet — which landlords can no longer unreasonably refuse — has addressed a common point of conflict.

Yet structural affordability pressures remain largely unaddressed by the legislation. Rent-to-income ratios in London and the South East continue to reach 40–50% or more for median-earning renters taking on a new tenancy — a figure that REalyse demographic overlay data corroborates when mapping ONS median earnings against average asking rents at district level. Outside London, affordability is less extreme but deteriorating steadily in cities like Bristol, Oxford, and Edinburgh.

The one-year cap on rent increases helps existing tenants with in-place tenancies, but it does not constrain the asking rent on new lettings. Landlords can and do reset rents to market levels at the point of reletting — meaning new entrants to the rental market, or those forced to move, face the full force of current rent levels without any transition protection.

Outlook: a market in rebalancing, not revolution

The narrative of the Renters' Rights Act triggering a rental market crisis has not been borne out — at least not yet. Supply is recovering incrementally. Rents are still rising but growth is moderating. BTR investment continues to flow into major urban markets. And tenants in England now have protections that, while imperfect, are materially stronger than they were two years ago.

The more significant determinant of where rents go from here is not regulation but supply delivery. If the BTR pipeline continues to build out — and if planning reform under current government policy genuinely accelerates residential permissions — the structural gap between demand and supply that has driven the rent surge of the 2020s will gradually narrow.

Until then, the data points to a rental market that is adjusting to a new regulatory reality more smoothly than many predicted, but one where affordability remains under real pressure for millions of tenants across every UK nation.

REalyse provides granular rental market analytics, active listing comparables, yield benchmarking, and planning pipeline intelligence across every UK postcode district. Explore rental data for your target market at pulse.realyse.com.