BLOGS

A widening gap between tenants and landlords

The UK rental market is sending a clear signal: tenants want homes faster than landlords are willing to supply them. RICS's latest UK Residential Market Survey put tenant demand at a net balance of +18% in June 2026, the strongest reading since May 2025, while landlord instructions remained stuck at -18%. That is not a one-off. It is the latest entry in an 18-month run of surveys where demand has consistently outpaced new rental stock coming to market.

For anyone tracking the private rented sector, the pattern is familiar by now: buy-to-let landlords citing Section 24 tax treatment, higher borrowing costs, EPC upgrade requirements and regulatory change under the Renters' Rights Act as reasons to reduce portfolios rather than expand them. Every landlord who exits tightens the pool of homes available to renters who, in a subdued sales market, often have fewer routes into ownership as an alternative.

What REalyse listings data shows

Our own rental listings data lines up with the RICS narrative. Average asking rent across the UK has climbed from around £1,580 in early 2025 to close to £1,950-£1,960 by mid-2026, a rise that has been fairly steady rather than a short-term spike, suggesting sustained rather than seasonal pressure.

The more telling signal sits in days on market. Rental listings were taking 43-51 days to let through most of 2025, but by the first half of 2026 that had compressed sharply, down toward the high teens and low twenties in several months. Properties are being absorbed into tenancies much faster than they were a year ago, a strong indicator of a market where available stock is being snapped up quickly rather than sitting and accumulating.

This kind of shift matters for anyone assessing rental yields or building comparables for a lettings valuation. A shrinking days-on-market figure combined with rising asking rents typically means landlords have more room to hold firm on price, and void periods - one of the biggest hidden costs in a buy-to-let return - are shortening in most regions.

Why supply keeps tightening

Several forces are compounding at once. Portfolio landlords have been rebalancing since Section 24 mortgage interest relief changes took full effect, and each Budget cycle since has added a fresh layer of uncertainty around capital gains and property taxation, which RICS respondents have repeatedly flagged as a reason for hesitant reinvestment. The Renters' Rights Act has added further compliance requirements that some smaller, less professionalised landlords appear unwilling to absorb, choosing to sell rather than relet.

At the same time, weakness in the sales market is doing double duty on the demand side. RICS reported new buyer enquiries at -29% and agreed sales at -32% in June 2026 - both still firmly negative. Would-be first-time buyers facing higher mortgage rates and cautious lending are staying in the rental pool for longer, adding to tenant demand just as landlord instructions pull the other way.

The regional picture is not uniform. RICS and REalyse data both point to the North of England, Scotland and Northern Ireland showing relatively more resilient conditions than London, the South East and East Anglia, where affordability is already more stretched and rent growth may be harder for tenants to absorb even as landlords retain pricing power.

What this means for landlords and investors

For landlords who remain active, the current dynamic is broadly supportive of income performance: falling days on market and firmer asking rents both point to stronger gross yields in many areas, provided acquisition costs and financing are managed carefully. RICS expects rents to rise by around 2.5% over the next 12 months at the headline UK level, though REalyse comparables suggest this varies meaningfully by property type and district, underlining the value of checking local rent and yield benchmarks before setting an asking price rather than relying on national averages alone.

For investors weighing new acquisitions, the imbalance also raises a genuine question about entry timing. A softer sales market can mean more room to negotiate on purchase price, while a tight lettings market supports the income case once a property is let. Running local comparables - achieved rents, yields and time-to-let by postcode district and property type - remains the most reliable way to separate genuinely attractive opportunities from areas where rent growth may already be priced in.

Outlook

The supply-demand gap in the rental market shows no clear sign of closing in the near term. Landlord instructions have been negative for an extended stretch, and the structural pressures behind that - tax treatment, compliance costs, cautious sentiment ahead of fiscal events - are not going away quickly. Tenant demand, meanwhile, is being reinforced by a sales market that is still finding its footing. Barring a meaningful shift in either the policy backdrop or mortgage pricing, rental supply is likely to remain the binding constraint on the market well into 2026, keeping upward pressure on rents even where wider housing sentiment stays subdued.