BLOGS

England's private rental market crossed a historic threshold on 1 May 2026. On that date, the Renters' Rights Act 2025 — which received Royal Assent in October 2025 — came into force, ending nearly four decades of assured shorthold tenancies and the Section 21 no-fault eviction that defined them. Every existing tenancy in England automatically converted to an open-ended periodic agreement. Landlords must now use the reformed Section 8 grounds-based system to recover possession. Bidding wars are banned. Rent increases are limited to once a year. The private rented sector (PRS) will never look quite the same again.

Two months on, it is possible to make a first serious assessment of what is actually changing — and what is not.

What the Act does, and what comes next

Phase 1 of the Act, now live, includes the abolition of Section 21, the replacement of fixed-term tenancies with assured periodic tenancies, the prohibition of rental bidding above advertised prices, a cap of one rent increase per year served via formal Section 13 notice, new anti-discrimination protections for tenants with children or in receipt of benefits, and the right for tenants to request to keep pets.

Landlords who breach the new rules face civil penalties of up to £7,000, rising to £40,000 for serious violations, with local authorities granted new investigatory powers and £18.2 million in enforcement funding from central government for the 2025–26 financial year.

Phase 2, expected in late 2026, will introduce a mandatory Private Rented Sector Database requiring all landlords and properties to be registered, alongside a new PRS Ombudsman. Phase 3 — the extension of the Decent Homes Standard and Awaab's Law to private rentals — is not expected until the mid-2030s.

England is, in one respect, simply catching up. Scotland abolished its equivalent of Section 21 in December 2017 through the Private Residential Tenancy regime. Wales, Northern Ireland and Scotland each operate under distinct frameworks, but the direction of travel across all four nations has long pointed toward greater tenant security and tighter landlord obligations.

The landlord exodus: accelerating or stabilising?

The most significant market dynamic entering May 2026 was not the legislation itself but the extended period of landlord attrition that preceded it.

Research from the National Residential Landlords Association (NRLA) found that 26% of landlords sold at least some rental properties in the second half of 2024 — the highest level on record — while only a small minority were buying new stock. A government-linked survey published earlier in 2026 found that 31% of landlords intended to reduce their portfolios and 16% planned to exit the sector entirely by the end of the year. Industry estimates suggest that nearly £48 billion of rental property value has been withdrawn from the PRS in recent years, in what analysts are describing as the largest contraction this century.

The composition of those exits matters. In Q1 2025, 15.6% of all new property instructions to estate agents were homes previously held as private rentals. Of approximately 70,500 former rental homes listed for sale in that quarter, only around 3,600 — roughly 3% — were subsequently re-let. The overwhelming majority simply left the rental pool.

These are not distressed sales. Many of the landlords choosing to exit are mortgage-free and financially stable. The exit calculus is being driven by a cumulative weight of regulatory change, tax reform — particularly the restriction of mortgage interest relief under Section 24 — and a sense that the policy environment has become structurally hostile to small-scale letting.

For those who remain, the picture is more complex. REalyse data shows that the fastest rent growth is concentrated in the districts where the small-landlord retreat has been most pronounced and where rental supply is tightest — a pattern consistent with basic supply-demand mechanics and one that will persist regardless of what the legislation says about annual increases.

What is happening to rents

The most recent ONS private rent and house prices release — published in April 2026 — provides the clearest data picture available ahead of the Act's implementation.

Average UK monthly private rents reached £1,377 in March 2026, up 3.4% year-on-year. That rate of growth is the lowest since March 2022, down from a peak of over 9% recorded during 2022 and 2023. Rental inflation is cooling — but from a very high base, and unevenly across the nations and regions.

In England, average monthly rents stood at £1,434 in March, up 3.4% on the year. The North East recorded the highest regional growth at 6.5%, while London — where affordability has stretched furthest — saw the slowest at 1.7%. Wales recorded average rents of £830 (up 4.8%), Scotland £1,022 (up 2.1%) and Northern Ireland £880 (up 5.0% to January 2026).

At the property-type level, the dynamics are even more striking. REalyse asking-rent data shows that flats — which dominate the rental market — recorded a -0.5% year-on-year change in early 2026, while terraced houses saw a sharper pullback of around -4.4%. Only detached properties, at the premium end of the market, maintained modest growth. This marks a clear departure from the 2–5% annual growth seen across all property types in 2024 and 2025.

HomeLet's Rental Index put the average UK rent at £1,301 per month in February 2026 — excluding London, the figure drops to approximately £1,120 per month, while London commands an average of around £2,067 per month. Zoopla data shows that the share of UK areas where average rents now exceed £1,000 per month has grown from 23% in 2020 to 52% in 2026 — a structural shift in what renting costs across the country.

Demand, meanwhile, remains intense. Propertymark's member data reports an average of seven applicants registering per available property. Rightmove data shows enquiries per available property are still nearly double pre-pandemic levels. Properties that come to market are letting quickly: REalyse data shows average days on market nationally sitting at around 39 days, with Scotland's rental stock — where supply is most constrained — clearing in as little as 32 days.

How the Act is changing landlord behaviour right now

Two months into Phase 1, three behavioural shifts are visible in the data and in agent commentary.

First, pre-emptive rent resets. In the weeks before 1 May, REalyse active listing data recorded a marked increase in new rental instructions at higher asking prices — consistent with landlords repricing to a level they felt comfortable holding for at least 12 months under the new annual-increase constraint. With the ability to adjust rent flexibly during a tenancy now curtailed, landlords appear to have front-loaded increases while they still could. This mirrors the pattern observed in Scotland in the months before and after its 2017 tenancy reforms.

Second, selective tenant screening. Without Section 21 as a backstop, some landlords and agents report applying more rigorous referencing criteria — income multiples, employment stability, references. Industry observers have noted this creates a harder pathway for renters in casual or self-employed work, those with benefit income (now explicitly protected from blanket discrimination under the Act), and younger tenants without established credit histories.

Third, portfolio rationalisation toward quality. Landlords who are staying appear to be concentrating their holdings in higher-quality assets with stronger fundamentals — good EPC ratings, low-maintenance stock, professionally managed. REalyse rental yield data suggests gross yields have compressed in many districts as rents plateau and property values remain elevated, making marginal assets increasingly difficult to justify holding at scale.

Build-to-rent: filling the gap, but only partially

The institutional build-to-rent (BTR) sector is increasingly cited as the structural counterweight to private landlord withdrawal. Knight Frank data from Q2 2025 showed the BTR pipeline — comprising completed, under-construction and planning-approved schemes — surpassed 300,000 units nationally. Lambert Smith Hampton projected the sector would attract record investment of around £6 billion in 2025.

Yet BTR's operational footprint remains modest: approximately 141,839 units are currently trading, representing less than 2% of England's private rented stock. REalyse planning pipeline data shows BTR development concentrated in a relatively small number of urban markets — Manchester, Birmingham, Leeds, Bristol and inner London — while suburban and rural areas, where the private landlord retreat is often most acute, remain largely outside institutional supply chains.

BTR units also typically command a premium. REalyse market data indicates new-build BTR stock lets at 10–15% above comparable older private rented accommodation, reflecting the amenity offer and the operational cost base of institutional management. For tenants seeking affordability, the BTR product is not always the answer — even where it exists.

The supply gap, in short, is real, structural and not yet close to being resolved by institutional capital alone.

Scotland's precedent: what England can learn

England is not operating in an evidence vacuum. Scotland has nine years of data from its 2017 tenancy reforms to draw on, and the picture is instructive.

REalyse data shows Scottish rental listings have fallen by 19% year-on-year, with properties clearing from the market at an average of just 32 days — reflecting intensity of demand against constrained supply. Average Scottish rents reached £1,022 per month in March 2026, up 2.1% annually — the lowest rate of growth in over four years, following a peak of 11.7% in August 2023. Whether that moderation reflects the effect of Scotland's rent control episodes, or simply affordability exhaustion, remains debated.

What is not debated is that Scotland's PRS has contracted. Fewer landlords are entering the market, and existing landlords have exited at pace. For England, the lesson is that removing landlord flexibility without simultaneously expanding supply through other channels creates a market that is more secure for the tenants who hold tenancies, but harder to access for those who need to find one.

Outlook: a more secure, but still undersupplied, market

The Renters' Rights Act 2025 represents a genuine and overdue shift in the balance of rights between tenants and landlords in England. For the 11 million people living in private rented accommodation, greater security of tenure is meaningful: the threat of a no-notice Section 21 eviction was a persistent source of housing instability, and its removal is broadly welcome.

But legislation cannot create supply. The structural challenge facing England's rental market in the second half of 2026 — and beyond — is the same one it faced before the Act arrived: not enough homes to rent in the places where people need to live.

REalyse data across active rental listings, transaction comparables and planning pipeline continues to show the fastest rent growth in the districts where supply is tightest and the small-landlord retreat has been most pronounced. Understanding that local dynamic — which postcode districts face acute supply pressure, where BTR pipeline is genuinely delivering, where yields remain workable against a realistic compliance cost base — is where data-driven decision-making delivers its clearest advantage.

The era of the accidental landlord is drawing to a close. Whether the institutions, professional operators and housing associations that follow can fill the gap — at the rents and in the locations that England's renters need — is the central question of the next decade.