BLOGS

A market recalibrating in real time

The private rented sector is absorbing one of its biggest regulatory shifts in a generation. The Renters' Rights Act — which ends Section 21 "no-fault" evictions, moves tenancies onto a periodic footing, and tightens the rules around rent increases and bidding wars — is landing on a market that was already adjusting to higher mortgage costs, tighter licensing regimes and growing HMO regulation.

The result isn't a single, uniform reaction. REalyse listings data across 2024–2026 shows two rental markets moving at different speeds: a mainstream private rented sector absorbing reform gradually, and a shared-housing and student segment where landlords appear to be repricing and restructuring more visibly. For investors, lenders and operators, understanding where the pressure is concentrated — and where institutional capital is filling the gap — is becoming a live underwriting question, not a background policy note.

Shared housing: higher yields, slower lets

REalyse rental listings data shows HMO stock consistently commanding a premium over standard private lets. Average asking rents on HMO listings have tracked in the £2,000–£2,500 per month range over the past two years, against roughly £1,550–£1,750 for non-HMO listings — a gap of 25–45% depending on the quarter. Gross yields tell a similar story: HMO listings have averaged around 6.2–7.0%, compared with 5.8–6.2% for non-HMO stock, reflecting the income-multiplication effect of letting by room.

But that premium is coming at a cost in liquidity. Days on market for HMO listings have run notably higher than the general market throughout the period — often 45–58 days against 34–49 days for non-HMO stock, with the gap widening sharply in Q4 of both 2024 and 2025. That seasonal pattern is familiar in student and shared-housing lettings cycles, but the persistence of a double-digit-day gap versus mainstream lets suggests something structural is also at play: landlords testing higher price points, tenants taking longer to commit under new tenancy terms, or smaller portfolio landlords absorbing licensing and compliance costs more slowly than professional operators.

For lenders and brokers underwriting HMO-backed loans, this combination — stronger headline yield, weaker turnover speed — is worth flagging explicitly in affordability and voids assumptions. A property pricing at the top of its yield band but sitting empty for an extra three to four weeks a quarter can erode much of that yield advantage in practice.

Student lets and the institutional shift

Purpose-built student accommodation and co-living are behaving differently again. REalyse planning pipeline data shows student accommodation and build-to-rent schemes heavily concentrated in London and a small number of core regional markets — London alone accounts for well over 100 completed BTR schemes tracked in the pipeline data, dwarfing single-digit completion counts in most other English regions. Co-living remains a smaller but genuinely emerging category, with meaningful in-progress pipeline concentrated in London and the East of England rather than spread nationally.

This concentration matters in the context of rental reform. Purpose-built and professionally managed stock — BTR, PBSA, co-living — is generally better placed to absorb the compliance burden of the new tenancy regime: standardised leases, in-house management, and institutional balance sheets that can smooth voids. Individual landlords letting shared houses in the general private market carry a different risk profile, and REalyse data hints that this is where pricing and time-to-let are moving most.

The practical read for developers and investors: markets with strong existing student demand but thin PBSA pipeline outside London and the East Midlands may offer the clearest opportunity to convert reform-driven landlord attrition into institutional stock absorption — provided planning routes and land values support the underwriting case.

What this means for pricing and stock strategy

Three adjustments appear to be underway across the markets REalyse tracks:

• Repricing at the point of instruction. Agents and landlords in HMO-heavy markets appear to be setting asking rents higher, partly to offset extended void periods and partly in anticipation of tighter rent-increase mechanisms once periodic tenancies bed in.

• Stock rotation towards professionally managed formats. The persistent gap between London's BTR/PBSA completion volumes and the rest of the country suggests capital continues to favour markets where scale and management infrastructure already exist, rather than spreading evenly to underserved regional student and rental markets.

• Slower absorption as a leading indicator. Rising days-on-market in the HMO segment, even during traditionally strong-demand quarters, is a useful early signal for lenders and agents assessing whether local shared-housing supply is beginning to outpace tenant appetite at current price points.

Outlook

None of this points to a rental market in retreat — yields remain historically attractive across most segments, and demand for shared and student housing shows no sign of structural decline. But the transition period around the Renters' Rights Act is exposing a widening gap between professionally managed rental stock and the individual-landlord-dominated shared housing sector.

For institutional investors and lenders, the opportunity lies in using granular comparables — by property type, HMO status, and region — to distinguish markets where reform is simply adding friction from those where it's accelerating a genuine shift in ownership structure. For agents and brokers, the near-term task is sharper: price realistically for longer void periods in shared housing, and be ready to explain to landlord clients why the old playbook on rent-setting and tenancy turnover no longer applies uniformly across the market.