BLOGS

England's rental market enters a new era

For the better part of three decades, Section 21 of the Housing Act 1988 defined the relationship between England's private landlords and their tenants. With two months' notice and no obligation to state a reason, a landlord could reclaim a property at will. That power is now gone.

The Renters' Rights Act — which received Royal Assent in 2025 and began rolling out its principal provisions in the first half of 2026 — represents the most significant structural overhaul of England's private rented sector (PRS) in a generation. Alongside the abolition of Section 21, the legislation has introduced periodic rolling tenancies as the default, capped rent increases to once per year per tenancy and created a new Private Rented Sector Landlord Ombudsman alongside a mandatory registration database.

The question exercising investors, agents and tenants alike is deceptively simple: what happens next?

Landlords are repricing risk — and some are leaving

Before the first provisions came into force, surveys by the National Residential Landlords Association (NRLA) consistently showed that between one-quarter and one-third of landlords were considering exiting the PRS entirely if Section 21 were abolished without sufficiently robust alternative possession grounds. Whether that intention is translating into action is now becoming clearer.

Land Registry transaction data tracked through REalyse shows elevated volumes of former rental properties coming to market in several major English cities in Q1 and Q2 2026. In some established buy-to-let districts — particularly across inner London boroughs, parts of Greater Manchester and Bristol — the share of sales listings flagged as previously tenanted has risen noticeably compared with the same period in 2024. This is consistent with a cohort of smaller, accidental or older landlords concluding that the regulatory burden, combined with higher mortgage rates that have squeezed gross yields over recent years, makes continued ownership uneconomic.

REalyse yield data across key English postcode districts shows average gross rental yields for two-bedroom flats in the range of 4.5% to 6.5% in most regional cities, and as low as 3% to 4% in prime London areas. For a leveraged landlord carrying a buy-to-let mortgage at current rates, those returns leave little margin before stricter compliance costs and reduced eviction flexibility tip the calculation into negative territory.

Importantly, not all landlords are retreating. Portfolio and institutional operators — including build-to-rent developers and larger HMO providers — appear to be viewing the regulatory environment as a competitive advantage. Professionalised operators who have already invested in compliance infrastructure are better placed to absorb the new obligations than the individual landlord managing one or two properties on the side.

Supply contraction is pushing advertised rents higher

Whatever the ultimate pace of landlord exit, the short-term effect on supply is already visible in listing data. The number of available private rental properties advertised across England's major portals remains well below pre-pandemic norms in most cities, a structural shortfall that the new legislation has, at least in the near term, done little to reverse.

ONS Private Rental Prices data published in mid-2026 shows annual rental inflation running at elevated levels across most English regions — figures that are broadly consistent with REalyse's own analysis of active rental listings. Asking rents in London continue to track above £30 per square foot per annum in many inner boroughs, while regional cities including Birmingham, Leeds, Manchester and Bristol are seeing sustained asking rent growth in the 5% to 8% year-on-year range for flatted accommodation.

The rolling tenancy model adds a further dynamic. Under the new regime, landlords can no longer use a fixed-term end date as a natural reset point to reprice a tenancy to market rate. Rent reviews are now limited to once per year, with tenants able to challenge any proposed increase before the First-tier Tribunal. Early anecdotal evidence from agents suggests some landlords responded by setting initial asking rents more aggressively at the point of a new let — pricing in the rent growth they previously captured through tenancy renewal — rather than starting low and increasing over time.

This front-loading behaviour, if sustained at scale, could paradoxically accelerate asking rent inflation in the short run even as it provides greater in-tenancy stability for households who successfully secure a property.

Tenant demand: security without certainty of access

From a tenant perspective, the legislative changes represent a material improvement in security of tenure. The end of Section 21 removes the threat of no-fault eviction that ONS data consistently identified as one of the leading causes of homelessness presentations among privately renting households. The new periodic tenancy structure gives tenants the ability to end a tenancy with two months' notice after the first six months, without penalty, while landlords must now navigate a reformed set of mandatory possession grounds.

Demand for rental property in England, however, shows no sign of abating. REalyse data on active rental listings consistently records demand-to-supply ratios well above historical equilibrium across most English postcode districts. Average days on market for rental listings in desirable urban districts remains compressed — frequently below 20 days in London, Leeds and Manchester — indicating that the structural undersupply of rental homes is the dominant market force, irrespective of regulatory change.

There is a risk that supply contraction driven by landlord exit narrows the effective choice available to renters even as the legal protections available to them improve. For lower-income households and those relying on Local Housing Allowance, access to a dwindling pool of affordable private lets remains the central challenge — one that no single piece of legislation can fully resolve without a parallel increase in housing supply.

Planning and development data tracked through REalyse shows a substantial pipeline of build-to-rent units under construction and with planning consent across England's major cities. If that pipeline delivers to programme, it represents a meaningful, if partial, offset to the loss of smaller landlord stock. The gap between planning consent and completed units, however, remains wide — particularly given ongoing viability pressures in the development sector.

What the data says about the months ahead

The Renters' Rights Act is not a single moment; it is a process. Secondary legislation, tribunal capacity and the pace of database registration will all shape how the reforms bed in over the remainder of 2026 and into 2027. Several pressure points are already visible.

First, the First-tier Tribunal (Property Chamber) is likely to face a significant increase in caseload as more tenants contest annual rent increases — a dynamic that will require adequate resourcing if delays are not to undermine the purpose of the legislation.

Second, the new PRS Landlord Database creates, for the first time, a systematic record of private rental stock across England. Once operational at scale, the data generated will be a valuable resource for local authorities, lenders and analysts seeking to understand the true size and composition of the sector — data that REalyse will be tracking closely as it becomes available.

Third, mortgage lenders are actively reassessing buy-to-let underwriting criteria in light of the new possession landscape. Some are already applying more conservative interest coverage ratio requirements for individual landlords, while others are revisiting the treatment of periodic tenancies in their product terms. These adjustments will influence the economics of new buy-to-let acquisitions throughout the year.

Outlook: a market in transition, not in freefall

It would be wrong to characterise England's rental market as being in crisis because of the Renters' Rights Act. The structural forces — chronic undersupply, strong employment-driven demand in major cities, continued household formation growth — remain firmly in place and would be pushing rents higher regardless of legislative backdrop.

What the Act has done is accelerate a long-running structural shift: away from a fragmented market of small private landlords toward a more professionalised, institutionalised PRS. That transition creates real short-term pain — in supply, in affordability and in landlord sentiment — but it also creates conditions for a more stable, better-regulated rental market over the medium term.

For investors, the premium on data-driven decision-making has never been higher. Understanding which districts face the sharpest supply contraction, where yield compression is most acute and where institutional supply is emerging to fill the gap is essential. The landlords and investors who navigate this landscape successfully will be those who treat regulatory change not as a reason to exit, but as a filter that rewards those with the analytical foundations to adapt.