BLOGS

England's rental market faces its biggest legal shake-up in a generation

The Renters' Rights Act received Royal Assent in March 2025, ending the era of the assured shorthold tenancy and, with it, the landlord's unconditional right to reclaim their property through a Section 21 notice. For tenant advocates, it was a landmark moment — the end of so-called "no-fault" evictions that had long been identified as a primary driver of housing insecurity in the private rented sector (PRS). For landlords, particularly smaller portfolio holders, it represented a fundamental rewriting of the risk calculus underpinning their investment.

More than a year on, the early data is beginning to tell a story. It is not a simple one. Supply has tightened, rents have risen, and the composition of the market appears to be shifting — even as the reformed possession courts and new landlord database begin to bed in. This analysis draws on REalyse rental market data, industry reporting from the National Residential Landlords Association (NRLA) and Propertymark, and published statistics from the Ministry of Justice.

The supply squeeze: fewer rental homes reaching the market

The most immediately measurable impact of the Act's passage has been on the volume of rental stock coming to market. REalyse data covering England shows that the total number of rental listings fell by approximately 20% year-on-year across all major property types when comparing the twelve months to June 2026 against the twelve months to June 2025.

The contraction was remarkably consistent across property categories:

• Flats (the dominant rental tenure): listings fell from around 430,000 in the prior period to approximately 343,000 — a decline of just over 20%

• Detached houses: down around 21%, from roughly 67,000 to 53,000 listings

• Semi-detached and terraced homes: declines of approximately 17–20%

This is not simply a seasonal artefact. The twelve months to June 2025 — broadly the period before the Act's key possession provisions came fully into force — itself showed signs of elevated churn, with June 2025 recording the highest single-month listing volume in the REalyse dataset at over 76,000 properties. That surge is consistent with NRLA survey data showing a significant proportion of landlords either selling up or accelerating rental cycles ahead of the implementation date. The market then contracted meaningfully once those properties cleared.

Industry bodies have documented a sustained wave of small landlord exits since 2022, accelerated by higher mortgage rates, stamp duty changes and the gradual erosion of mortgage interest relief. The Renters' Rights Act appears to have acted as a further catalyst, particularly for accidental landlords and those managing single properties where the new possession grounds under Section 8 — which replaced Section 21 — feel less predictable and court timelines remain uncertain.

Rent trajectories: rising despite the reform

If the intent of supply-side pressure from landlord exits was to give tenants more bargaining power, the rental market has not cooperated. REalyse data shows average asking rents rising across all property types in England in the year to June 2026, compared with the prior twelve months.

The increases range from +1.3% for semi-detached homes (£1,651/month to £1,671/month) to +3.4% for detached houses (£2,190/month to £2,263/month). Flats — by far the most prevalent rental property type — saw asking rents rise by +2.5%, from £1,664 to £1,705 per month.

These figures sit broadly in line with ONS Private Rental Index trends, which have shown a gradual deceleration from the double-digit growth seen in 2022–23, but remain well above wage growth benchmarks that affordability advocates use to define sustainable rent levels.

The monthly trajectory is revealing. Average asking rents across England peaked at £1,817/month in July 2025 — the highest level in the period tracked — before a modest seasonal correction through winter 2025 into early 2026. By March 2026, the average had settled at approximately £1,726/month. Whether that moderation represents genuine affordability relief or seasonal normalisation typical of every winter cooling cycle remains to be seen as summer 2026 letting season data comes through.

At a per-square-foot level, REalyse data shows rental values have held firm in the £26–£29/sqft (annual) range through 2025, pointing to underlying demand that continues to absorb whatever stock is available.

Eviction patterns and Section 8: courts under pressure

The abolition of Section 21 was designed to end the practice of landlords evicting tenants without providing a specific reason. In its place, Section 8 notices — which require landlords to cite one of the statutory grounds for possession, from rent arrears to the landlord wishing to sell or move in — became the sole route to possession.

Ministry of Justice possession statistics through early 2026 suggest that Section 8 claims have risen materially since the Act came into force, consistent with the loss of the Section 21 route. Critically, court timelines for contested possession claims remain significantly longer than the pre-reform baseline for Section 21 accelerated claims, with sector bodies citing average timelines of several months for uncontested cases and considerably longer for disputes. That lengthening of the eviction process is precisely what smaller landlords feared, and anecdotal evidence from lettings agents nationally — backed by Propertymark member surveys — suggests it remains the single largest driver of landlord exit decisions.

REalyse planning and listings data does not yet show a material increase in new build-to-rent (BTR) schemes moving into rental supply in markets where individual landlords are retreating, though the pipeline for institutional BTR development in regional cities including Manchester, Leeds and Birmingham remains active. Whether institutional supply is scaling fast enough to offset the PRS contraction is, for now, an open question.

Tenant demand: undimmed and increasingly competitive

Against contracting supply, tenant demand has shown no equivalent softening. Search activity data from major portals indicates that available rental properties continue to attract multiple applicants per listing in most English cities, with Rightmove reporting enquiries per listing at elevated levels through the first half of 2026. Days-on-market for rental properties has remained short in urban markets, where supply pressure is most acute.

REalyse market data shows that in several high-demand postcode districts across London, the South East and core regional cities, asking rent levels per square foot are running at or near cyclical highs — indicating that whatever landlord exits are occurring, they are not — at least not yet — creating excess supply. The tightest markets, particularly those dominated by flats close to employment hubs, are showing the strongest rent resilience.

The practical implication for tenants is uncomfortable. The Renters' Rights Act delivers meaningful protections — security of tenure, protections against retaliatory eviction, a new ombudsman for dispute resolution — but it cannot conjure additional supply. Without a material increase in new homes available to rent, whether through BTR development, unlocking existing owner-occupied stock, or longer-term housebuilding reform, the structural affordability problem in England's PRS will remain.

Outlook: a market adjusting, not stabilising

The first year of the Renters' Rights Act has produced a market in transition rather than one in equilibrium. Supply is down, rents are up, and the composition of the landlord base is shifting from small private investors toward larger professional operators — a structural change that, in time, may improve management standards but does not automatically improve affordability.

For investors and analysts tracking the PRS, the next twelve months will be critical. Court system capacity under the reformed possession regime will determine whether smaller landlords begin to return to the market or continue exiting. ONS and Land Registry data on buy-to-let transactions will show whether institutional capital is filling the gap at scale. And REalyse rental listing and yield data will provide the ground-level signal on whether supply is recovering or the contraction is becoming structural.

What is already clear is that the Renters' Rights Act has fundamentally altered the risk and return profile of residential letting in England. The market is repricing accordingly — and tenants, for now, are bearing much of that cost.