BLOGS

The biggest reset in a generation

When the Renters' Rights Act received Royal Assent in May 2025, it marked the culmination of years of political debate over the balance of power in England's private rented sector. The legislation abolished Section 21 "no-fault" evictions, converted all assured shorthold tenancies to open-ended periodic tenancies, banned rental bidding wars, extended the Decent Homes Standard to private landlords, and gave tenants the legal right to keep pets. On paper, it represented the most pro-tenant shift in English housing law since the Housing Act 1988.

What does the data tell us about the market's response — and where are rents and yields likely to head next?

Rents moderated from their summer peak — but are still higher year-on-year

The immediate post-Act period produced a counterintuitive pattern. REalyse data tracking rental listing activity across England shows average monthly asking rents hit their lowest point of the current cycle in Q1 2025, at around £1,631–£1,637 per month in the January–March window — the months before the legislation took effect. Rents then climbed sharply through spring and summer 2025, reaching a peak of approximately £1,810 per month in July 2025.

That surge is likely explained by two overlapping factors: seasonal demand peaking in the summer months, and a notable cohort of landlords moving to re-let or reprice properties ahead of the bidding war ban and the autumn commencement of the Section 21 abolition provisions. Once those provisions took effect, average asking rents eased back through Q4 2025 and into early 2026, settling at around £1,683–£1,711 per month in the January–March 2026 period.

Crucially, that moderation should not be misread as a falling market. Comparing like-for-like months, average asking rents in England are running roughly 3–5% higher year-on-year in early 2026 versus early 2025 — a deceleration from the double-digit annual growth recorded in parts of the country during 2022 and 2023, but still a positive trajectory for landlords.

Supply is thin and competition remains fierce

The softening in headline rent growth masks a structural tension: rental supply remains critically tight relative to demand. REalyse data shows the volume of new rental listings peaked in June and July 2025, with over 70,000–82,000 new listings appearing in those months alone, before retreating to around 56,000–59,000 per month in Q1 2026. That drop in new supply flowing onto the market is consistent with anecdotal reports from agents of landlords pausing re-lets, selling up, or transferring stock to short-term holiday platforms in the wake of the new legislation.

At the same time, days-on-market figures reveal just how fast available properties are being absorbed. Across England, the average rental listing spends around 39–40 days on the market before being let — a tight figure that understates the intensity of competition in urban centres. In East London (E postcode area), average days on market stands at just 35.6 days with average asking rents of £2,439 per month. North London (N) follows closely at 36.7 days and an average of £2,490 per month. In the City and West End areas (EC and WC), rents average £3,577 and £3,699 per month respectively, with properties letting in as few as 36–38 days.

Outside the capital, Manchester's M postcode records average asking rents of £1,480 per month and is clearing its rental stock in roughly 40 days — tight for a regional city and consistent with the sustained rental growth Greater Manchester has experienced since 2021.

Property type breakdown: flats dominate, but houses command a premium

The rental market is overwhelmingly driven by flat supply. Over the last 12 months, flats accounted for approximately 350,000 active rental listings in England — far outpacing terraced houses (around 117,000 listings) and semi-detached properties (around 76,000 listings). That reflects the geography of rental demand, concentrated in urban cores where apartment stock dominates.

Average asking rents by property type reveal a clear premium for space:

• Detached houses: £2,260/month — commanding rents that reflect family demand and relative scarcity in the lettings sector

• Terraced houses: £1,735/month — a popular and affordable middle tier for households priced out of detached property

• Flats: £1,705/month — the market's anchor product, with by far the highest listing volume

• Semi-detached: £1,670/month

• Flat shares: £1,247/month — increasingly attractive for cost-conscious renters squeezed by affordability pressures

The persistence of strong demand across all property types, despite the Renters' Rights Act's additional regulatory burden on landlords, signals that tenant need is outrunning any supply-side withdrawal from the sector.

Landlord response: yields under scrutiny, but the investment case holds

One of the central concerns raised ahead of the Act's passage was that institutional and individual landlords would exit the private rented sector in material numbers, shrinking available stock and paradoxically driving rents higher over the medium term. That dynamic appears to be playing out — gradually rather than dramatically.

REalyse data on rental yields shows meaningful variation by geography and property type. Areas with more affordable property values — particularly in the North East, Yorkshire and the Midlands — continue to offer gross yields that remain attractive relative to the cost of compliance with the new legislation. Landlords operating in prime London locations face a different calculus: lower gross yields, higher regulatory exposure, but also deeper liquidity if they choose to sell.

The bidding war ban is particularly worth watching. By preventing landlords from accepting offers above advertised rent, the legislation has removed a mechanism that accelerated rent inflation in the tightest markets over 2022–2024. REalyse comparables data shows that in high-demand postcode districts — particularly across inner London and central Manchester — achievable rents had regularly exceeded advertised rents by 5–10% as prospective tenants competed for scarce stock. That gap is now compressed, which explains part of the statistical moderation in asking rents relative to prior peaks.

Outlook: regulatory stability, but structural upward pressure on rents

The balance of evidence suggests that the Renters' Rights Act has achieved a near-term cooling effect on the pace of rent inflation, primarily through the bidding war ban and the psychological shift in market expectations. However, the structural dynamics underpinning the English rental market — undersupply of new rental stock, persistent urban population growth, and a planning system that continues to restrict density in the most sought-after locations — have not been altered by the legislation.

REalyse development pipeline data highlights that permitted residential schemes in many of England's high-demand cities remain weighted towards owner-occupier product rather than purpose-built rental accommodation. Without a meaningful uplift in build-to-rent and affordable private rented supply, the medium-term trajectory for rents remains upward — even as the speed of increase normalises from its post-pandemic extreme.

For landlords, lenders and investors trying to navigate this environment, the key variables to track are: supply of new rental instructions relative to demand in target districts; achieved-versus-asking rent ratios as a gauge of real pricing power; and the evolution of case law under the reformed Section 8 grounds, which will determine how efficiently landlords can recover possession when they have legitimate grounds to do so.

The Renters' Rights Act is a structural reset, not a temporary disruption. The market is adapting — but the direction of travel on rents, over any meaningful investment horizon, remains north.