BLOGS

England's private rental market has entered a new era. The Renters' Rights Act 2025, which received Royal Assent on 27 October 2025 and came into force on 1 May 2026, represents the most sweeping reform of the private rented sector (PRS) in over four decades. Affecting approximately 11 million tenants and 2.3 million landlords across roughly 4.7 million privately rented homes in England, its headline measures — the abolition of Section 21 "no-fault" evictions, the replacement of fixed-term tenancies with open-ended periodic agreements and a ban on above-asking-price rent bidding — have been widely described as a generational shift in how the market operates.

But legislation reshapes incentives; it does not conjure supply. As the market moves through its first months under the new rules, a more complex picture is emerging: one of cautious landlords, more secure tenants and a rental pricing environment that RICS data suggests is still pointing firmly upward.

The end of Section 21 — and what landlords are doing about it

For more than three decades, Section 21 of the Housing Act 1988 gave private landlords the power to repossess a property without providing a reason, subject to proper notice. From 1 May 2026 that power is gone. Landlords must now rely on expanded Section 8 grounds — covering rent arrears, anti-social behaviour, the wish to sell the property or the need to occupy it — to regain possession through the courts.

The National Residential Landlords Association (NRLA) has called this the "most significant shake-up of the rental market in almost 40 years." Survey data gathered through 2025 suggested that as many as one in five buy-to-let landlords planned to reduce their portfolios in response to the Act, citing the added complexity of grounds-based possession, increased compliance obligations and reduced operational flexibility.

In practice, the feared landlord exodus has been more nuanced than the headlines suggested. Inventory Base data, drawing on Rightmove listings, showed that rental stock across England actually rose by 25% in Q4 2025 compared to Q3, and was up 15.4% year-on-year — driven partly by tenants holding position ahead of the new rules rather than a wave of new supply. By contrast, London stood apart: the City of London saw available stock fall 14.1%, and Greater London fell 2.4% — evidence that in the tightest urban markets, any landlord exits are not being replaced.

REalyse data tracking active rental listings across England's major cities corroborates this regional divergence. Average days on market in cities such as Birmingham and Bristol compressed sharply through early 2026, while London's chronic undersupply persisted. The direction of travel — fewer properties per active tenant search — remained consistent with further rent pressure.

The Act's enforcement provisions are also beginning to have an effect on landlord behaviour. Local authorities now have investigatory powers backed by fines of between £7,000 and £40,000 for breaches, with the government allocating £18.2 million to councils for enforcement support in 2025/26. Landlords in the sector are investing more seriously in compliance, tenancy documentation and property condition — trends that professional operators and build-to-rent (BTR) platforms are better placed to absorb than smaller portfolio landlords.

Periodic tenancies: stability gained, flexibility lost

Under the Act, all existing Assured Shorthold Tenancies automatically converted to open-ended periodic assured tenancies on 1 May 2026. There are no more fixed end dates. Tenants may leave with two months' notice at any time; landlords must use the reformed Section 8 grounds-based process to recover possession.

For tenants, particularly those who have experienced repeated short-notice evictions or the insecurity of rolling 12-month contracts, this change offers something tangible: the legal right to stay until they choose to leave. Shelter and tenant advocacy groups have long argued that the insecurity of fixed terms was one of the primary drivers of housing instability and associated social costs.

For landlords, the calculus has shifted considerably. With rent increases now capped at once per year — and tenants able to challenge excessive rises at the First-tier Tribunal — the ability to respond rapidly to market changes is reduced. Some landlords, particularly those with smaller portfolios, have responded by seeking to price aggressively at the start of tenancies to "future-proof" income, a behaviour noted by Sian Hemming-Metcalfe, Operations Director at Inventory Base, in her commentary on Q1 2026 data.

That early-tenancy pricing dynamic is now visible in the data. Analysis of ONS private rental data by Inventory Base showed that average rents in England rose by 0.77% to £1,434 per month in Q1 2026 — a slowdown from the prior year's equivalent period, and far below the rate that many anticipated following the Act's passage. Fears that landlords would front-load aggressive rent rises ahead of the annual cap proved only partially founded: roughly one in four landlords appears to have adopted that approach, while the majority moved more cautiously.

Regional variation was significant. London recorded quarterly rent growth of 1.20% in Q1 2026, nearly double the 0.63% posted in the same period of 2025. The North East, by contrast, slowed from 2.11% to 0.65%. Some 73.1% of local authorities across England recorded slower rental growth year-on-year — a pattern consistent with market adjustment rather than price collapse.

Rent bidding banned — but demand continues to push prices higher

One of the Act's less-discussed but materially important provisions is the prohibition on rent bidding. Landlords and agents are now legally required to publish a fixed asking rent and may not invite, encourage or accept offers above that figure. Practices that had become normalised in high-demand markets — particularly in London, where prospective tenants routinely offered months of rent upfront or bid significantly above the listed price — are now unlawful.

In theory, this should moderate asking rents and reduce the advantage of wealthier renters in competition for the same property. In practice, the evidence suggests that constrained supply is offsetting any softening effect on market prices. Where demand materially exceeds supply, landlords have simply adjusted their advertised asking rents upward to reflect the market level — pricing at what the market will bear from the outset, rather than letting informal bidding find the clearing price.

This is precisely where the Act's structural limitation becomes apparent. The RICS April 2026 UK Residential Market Survey — the first comprehensive sentiment reading after the Act's implementation — showed tenant demand at a net balance of +14%, while new landlord instructions remained firmly negative at -17%. A net balance of 25% of RICS survey respondents expected rents to rise further in the near term. That is a market still pricing upward, even after the largest legislative intervention in a generation.

Earlier in the year, the RICS January 2026 survey had pointed in the same direction: tenant demand returned to positive territory at +13%, landlord instructions fell to -24%, and near-term rent expectations stood at +28%. The structural imbalance pre-dates the Act, of course — it has been building since at least 2020 — but the legislation has not yet produced the supply-side response needed to contain it.

REalyse rental yield data across England's key markets illustrates why the investment case for the sector remains compelling even under the new framework. In several northern cities, gross rental yields continue to outperform the national average significantly, drawing institutional capital into the BTR pipeline. The planning and development data tells a similar story: schemes targeting the rental sector — particularly purpose-built BTR — continue to progress through planning in Manchester, Leeds, Birmingham and Bristol, suggesting that professional operators see the new regulatory environment as a competitive opportunity rather than a barrier.

A market professionalising under pressure

The clearest structural consequence of the Renters' Rights Act may be the accelerated professionalisation of the landlord base. The combination of expanded tenant rights, grounds-based possession, annual rent increase caps, Decent Homes Standard requirements (due to extend to the PRS in a later phase) and mandatory registration on a new Private Rented Sector Database creates a compliance burden that disproportionately favours operators with systems, scale and legal resource.

This is beginning to show in portfolio data. REalyse comparables analysis across England's major cities shows a gradual shift in the composition of active rental listings — with BTR and professionally managed stock holding or growing market share, while smaller landlord supply thins. This mirrors a trend observable in RICS landlord instruction data since mid-2024, when a sustained run of negative readings began that has not yet reversed.

Affordability remains the market's most pressing unresolved tension. ONS data and REalyse market indicators confirm that rent-to-income ratios in London, the South East and increasingly the East of England have moved to levels that leave little headroom, particularly for households on median or below-median incomes. The rent bidding ban and one-increase-per-year cap represent genuine protections against the most aggressive price pressure — but they are protections applied within a market where supply remains too thin to bring rents down materially.

Outlook

The Renters' Rights Act has delivered a historic realignment of rights in England's rental sector. Section 21 is gone, fixed-term tenancies are gone, and rent bidding wars are now unlawful. For the 11 million people who rent privately in England, that represents real and durable gains in security and legal standing.

But the fundamental economics of supply and demand are not legislated away. With RICS data consistently pointing to tenant demand outpacing landlord supply, with near-term rent expectations remaining positive across most of England, and with the institutional and BTR pipeline still unable to compensate at scale for the gradual thinning of private landlord stock, the pressure on rental prices and tenant affordability is likely to persist.

For landlords, investors and developers navigating this new landscape, the imperative is clarity on local market conditions — where yields still stack up, where supply is tightest, where planning data signals new competition. Understanding those dynamics in granular, real-time detail is not just useful; in a market being reshaped this quickly, it is essential.