BLOGS

England's rental market is seven weeks into the most significant legal transformation it has seen in nearly four decades. The Renters' Rights Act 2025, which received Royal Assent on 27 October 2025 and came into force on 1 May 2026, has reshaped the rules for the approximately 4.7 million privately rented homes in England and the 11 million people who live in them.

The headline change — the abolition of Section 21 "no-fault" evictions — has commanded most of the attention. But the full picture is more complex: a convergence of supply contraction, accelerating professionalisation, stubbornly strong rental demand and early upward pressure on rents that may test the very affordability the Act was designed to protect.

A 38-year regime, dismantled overnight

From 1 May 2026, every assured shorthold tenancy in England automatically converted to an open-ended periodic assured tenancy. The fixed-term AST — the standard six- or twelve-month contract that has defined English renting since the Housing Act 1988 — no longer exists. Landlords who wish to regain possession must now use the reformed Section 8 grounds-based system, citing legally recognised reasons such as serious rent arrears, anti-social behaviour, the intention to sell, or the need to occupy the property themselves.

Even those "permissive" grounds come with conditions. Landlords cannot evict to sell or move in during the first twelve months of a tenancy, and must give at least four months' notice. Rent increases are capped at once per year, require two months' notice via a Section 13 notice, and can be challenged at the First-tier Tribunal if tenants believe the proposed increase is above market rate.

The ban on rental bidding wars is equally significant. Landlords must advertise a fixed asking rent and cannot solicit or accept offers above that level — a rule designed to end the informal auctions that have systematically disadvantaged lower-income renters in high-demand urban markets. Maximum rent in advance is capped at one month. Anti-discrimination rules now prohibit blanket refusals of tenants receiving housing benefit or those with children. Landlords who breach the new framework face civil penalties of between £7,000 and £40,000.

Phase 2 of the rollout, expected in late 2026, will introduce a mandatory Private Rented Sector Database requiring all landlords to register, along with a new PRS Ombudsman. Phase 3 will extend the Decent Homes Standard and Awaab's Law repair timelines to the private sector.

The great landlord reckoning: supply contracts before demand does

The most immediate consequence of the Act has not been felt in the courts — it has been felt in the listings data.

Well before 1 May, the market was already adjusting. Analysis by Investec found that in Q1 2025, nearly half of all London homes newly listed for sale had been rental properties at some point in the previous three years — up from 32.4% in Q1 2024. By the second and third quarters of 2025, only one in ten properties subsequently purchased was re-let, pointing to a genuine contraction in underlying rental supply.

Nationally, specialist lender Pepper Money projected that around 220,000 rental households — approximately 5% of England's private rental stock — would be withdrawn from the market by end-2026, with roughly 65,000 of those exits directly attributable to the Renters' Rights Act. Single-property landlords are twice as likely to sell as those with two or more units, according to the same research. The North East shows the highest proportional exit rate, with around 21% of landlords in the region indicating plans to sell in 2026.

Propertymark's Housing Insight report for March 2026 — the last full month before implementation — found demand continuing to outstrip supply significantly, with an average of seven registered applicants per available property across member branches. "Many agents were reporting ongoing concern from landlords surrounding future regulatory changes, which were influencing investment decisions and contributing to longer-term supply challenges," noted Propertymark chief executive Nathan Emerson.

REalyse data tracking active rental listings across England reflects this dynamic. Rental stock in high-demand postcode districts has continued to thin even as search activity holds firm, particularly in the South East and major regional cities where smaller landlords have been most active in exiting.

That said, TwentyCi data provides some nuance: the peak of the landlord sell-off appears to have passed. In January 2025, 17.4% of all newly listed homes for sale had been rental properties — the highest point recorded. By early 2026, that share had dropped back to around 10.4%, in line with long-run averages, suggesting that those who wanted to leave largely did so ahead of the legislative deadline.

Rents: the uncomfortable irony

Here lies the Act's central paradox. The legislation was designed, in significant part, to make renting more affordable and secure. Yet the supply dynamics it has helped trigger — combined with the structural undersupply that predates it — are pushing rents in the opposite direction.

Knight Frank's May 2026 London lettings index found that average rents in prime outer London rose 3% in the year to April 2026, the highest annual growth recorded since June 2024. Rental listings across prime central and outer London in Q1 2026 were 15% below the five-year average, according to Rightmove. In April, Knight Frank recorded 5.9 new prospective tenants for every new rental listing — the tightest ratio since September 2022, deep in the post-pandemic squeeze.

"Rental growth is being driven by a tightening supply backdrop," said Mel Constantinou, head of lettings at Knight Frank's south-west London operation. "The Renters' Rights Act is accelerating this, as landlords refine pricing strategies and, in some cases, exit the market, further constraining supply, while tenants increasingly stay put as choice continues to narrow."

The ONS recorded average monthly rents rising 6.1% year-on-year in 2024, equivalent to around £78 extra per month for a typical two-bed flat. Zoopla's March 2026 Rental Market Report showed national year-on-year growth moderating to approximately 1.9%, with stock still running around 23% below pre-pandemic levels. Rightmove's October 2025 data had recorded an average advertised rent of £1,385 per month nationally and £2,736 in London — figures that reflect how far the market has moved since 2020.

RICS's latest survey, alongside a Savills five-year forecast, projects UK rents will rise a further 12% cumulatively — broadly in line with income growth, but from a base that HomeLet calculates already consumes 32.4% of gross household income for the average English renter, up from 30.4% five years ago.

The bidding war ban, paradoxically, may accelerate upward pressure on advertised rents rather than contain them. Landlords who previously set asking rents conservatively and relied on competitive offers to achieve higher returns will now need to set their listed price at — or closer to — their true target. REalyse's listing price data across competitive urban districts is already beginning to reflect this recalibration.

Regional variation is pronounced

Not all markets are moving in the same direction at the same pace. Paragon Bank data for 2025 showed average gross buy-to-let yields reaching a 13-year high of 6.93% nationally, with Wales leading at 8.83% and the North East at 8.2%. REalyse yield data for high-demand regional city districts confirms a similar dispersion: as smaller landlords exit higher-regulation markets, the compressed supply base is delivering elevated yields for those who remain — particularly in Northern cities, where prices remain low enough for yields to be compelling even at current rents.

London, by contrast, faces affordability constraints that are limiting how far rents can realistically rise. Investec's analysis found London median rents at £2,200 in Q1 2024 and Q1 2025 before edging fractionally lower to £2,197 in Q1 2026 — suggesting that supply contraction and ceiling-level affordability are pulling in opposite directions.

Professionalisation accelerates: the end of the hobbyist landlord

One of the clearest structural signals from the first weeks of the Act is the acceleration of a trend that was already visible: the exit of casual, single-property landlords and the consolidation of stock in the hands of professional operators.

Investec's research noted a "growing number" of well-capitalised landlords and property entrepreneurs acquiring additional units as part-time investors exit — investors who, in the bank's words, have "the administrative support and established processes to manage increased regulation, while diversified portfolios help spread income risk across multiple units."

Four in ten investors surveyed by Investec said the Renters' Rights Act would actually encourage them to increase investment in the sector — a counterintuitive finding that makes sense once the competitive dynamics are understood. A market with fewer, lower-quality competitors, compressed supply and sustained tenant demand is not an unattractive proposition for a well-capitalised operator.

For the build-to-rent sector, the Act represents something close to a structural tailwind. REalyse's planning pipeline data shows that purpose-built rental development remains active across major English cities, particularly in Birmingham, Manchester, Leeds and outer London, as institutional capital bets on a market increasingly shaped by compliance requirements that only professional operators can efficiently absorb. Annual BTR completions of around 15,000 homes remain modest against the scale of PRS demand — but the direction of investment is unambiguous.

What tenants actually gain

Amid the market turbulence, it is worth being clear about what the Act delivers for the 11 million people renting privately in England.

The ability to remain in a home without the constant threat of a no-fault notice is a genuine and substantial gain. NRLA data has consistently identified Section 21 as a leading driver of homelessness; its removal changes the fundamental power dynamic between landlords and tenants in a way that no amount of market disruption should obscure.

Tenants can now stay for as long as they choose, subject only to landlords demonstrating valid grounds for possession. They cannot be evicted in the first twelve months of a tenancy simply because a landlord decides to sell. Rent rises are limited, noticeable in advance, and challengeable. The ban on discriminating against benefit recipients or families with children — while still requiring implementation guidance to be fully effective — removes a documented and widespread barrier that has excluded significant numbers of renters from well-managed housing stock.

The practical experience of these protections will deepen as courts process the first cohort of Section 8 claims under the new regime, and as Phase 2 enforcement infrastructure — the landlord database and ombudsman — comes online in late 2026.

Outlook: a structural reset, not a temporary adjustment

Seven weeks is too short a window to draw definitive conclusions about a legislative change of this magnitude. But the early signals are consistent enough to sketch the trajectory.

Supply will remain constrained through 2026 and into 2027, as the stock of exiting landlords is absorbed only partially and gradually by institutional and professional operators. Rents will face continued upward pressure in most markets, most acutely in undersupplied urban areas where demand from young professionals and families remains strong. The bidding war ban will reshape how rents are set and advertised, but is unlikely by itself to meaningfully reduce affordability pressure where fundamental supply-demand imbalances persist.

The longer-term picture depends heavily on questions the Act does not answer: whether planning reform and development volumes can bring new rental supply to market at scale; whether mortgage rate relief reduces the financial pressure on remaining landlords; and whether the Phase 2 enforcement infrastructure is robust enough to drive up standards without further eroding landlord confidence.

REalyse will be tracking all of these dynamics closely — from listing volumes and days-on-market trends at district level, to yield shifts across property types and the growing BTR pipeline. As the data matures, the shape of England's post-Section 21 rental market will come into sharper focus.

What is already clear is that the era of the casual, single-property buy-to-let investor is drawing to a close. The market that replaces it will be more regulated, more professional — and, for the millions of renters who now have meaningful security of tenure for the first time, meaningfully fairer.