BLOGS

England's private rented sector has been transformed. On 1 May 2026, the Renters' Rights Act 2025 — which received Royal Assent on 27 October 2025 — came into full effect, delivering the most significant overhaul of lettings law in a generation. Every assured shorthold tenancy in England automatically converted to an assured periodic tenancy overnight. Section 21 "no-fault" evictions ceased to exist as a legal mechanism. Landlords who want possession must now prove a statutory ground under the reformed Section 8 regime. And for the first time, advertising a property and then accepting bids above the asking rent is explicitly prohibited.

Eight weeks is not long enough to draw firm conclusions. But the early signals are clear, and they are already reshaping investment strategy, letting agent practices, and the lived experience of England's 11 million private renters.

Supply is contracting — and the numbers are stark

The most immediate market signal post-implementation is a tightening of rental stock, a trend that pre-dates May 2026 but has accelerated sharply in anticipation of the reforms.

Research published by specialist lender Pepper Money estimates that approximately 220,000 rental homes — equivalent to around 5% of England's private rented sector — could leave the market by the end of 2026. Of those exits, more than 65,000 are attributed directly to the regulatory changes introduced by the Renters' Rights Act.

The data from property analytics firm TwentyCi underscores the scale of the shift. The share of homes coming to market that were previously rented fell from 22.5% in Q1 2025 to 12.4% in Q1 2026 — a year-on-year decline of 45%. London saw the sharpest drop, down 51%. Crucially, only 11% of former rental homes sold in London during mid-2025 were subsequently re-let, suggesting that once landlords exit, that stock is not returning to the private rented sector.

Rental listing volumes have fallen across every UK region, with declines ranging from 5% to 26% year-on-year depending on the area. Wales and Scotland have seen particularly sharp contractions of more than 25%, reflecting broader regulatory pressures — including rent control measures in Scotland — layered on top of the structural changes in England.

REalyse data corroborates this supply squeeze at the local level. Across major English cities, average days on market for rental properties have dropped significantly from 2025 highs, with properties in high-demand urban postcodes letting in under three weeks in many cases. The feedback loop is clear: fewer homes available means faster competition among tenants, even as affordability constraints begin to cap what rents can achieve.

The landlord calculus has changed

The exit picture is not uniform. NRLA survey data and Goodlord's research indicate that while the landlord exodus is real, it is also showing signs of easing from the pre-May 2026 peak. Around 24% of landlords remain actively selling — but that figure has moderated from higher readings during 2025, when regulatory uncertainty was at its most acute. Still, only 44% of landlords surveyed expect to remain in the market by 2031, a finding with serious long-term supply implications.

Regionally, the North East has the highest proportional landlord exit rate — approximately one in five landlords there intend to sell in 2026. The South East, by contrast, accounts for the largest absolute volume of departures, with an estimated 46,000 dwellings expected to leave the PRS across the region.

Only 5% of landlords have purchased an additional rental property in the past year, and the build-to-rent pipeline — while growing — has not yet scaled quickly enough to offset private landlord withdrawals outside the largest urban centres.

Rent growth is cooling — but the picture is nuanced

Against a backdrop of supply contraction, one might expect rental inflation to be surging. The reality is more complex, and more instructive.

According to the ONS Price Index of Private Rents (PIPR), average monthly rent in England reached £1,444 in May 2026, up 3.4% year-on-year. That rate of growth is the slowest recorded since early 2022 — and a dramatic deceleration from the peak of around 9% seen in early 2024. The pattern holds across the UK: average private rents in Wales rose 4.7% to £836 per month, while Scotland saw just 1.0% annual growth to approximately £1,009.

Zoopla's June 2026 Rental Market Report puts average asking rent for new lets at £1,321 per month across the UK — up just 2.1% year-on-year — and declares pointedly that "the rental boom is over." The index also notes that rents are rising faster than the national average in 75% of local areas, a reminder that headline figures mask significant local variation.

The moderating trend has a clear driver: affordability. After years of double-digit rent increases, tenants have reached a ceiling. Without matching wage growth, landlords cannot push rents higher even where supply is tight. The Renters' Rights Act's new annual increase cap — requiring landlords to follow the Section 13 statutory process with at least two months' notice, and permitting tenants to challenge increases at the First-tier Tribunal — has formalised this constraint.

REalyse rental market analysis across key districts shows that the gap between asking rents and achieved rents has narrowed in most postcodes over the past twelve months, a sign that pricing has become more disciplined, and that the wild premiums seen in competitive markets during 2022–2024 are largely behind us.

London and the North: a tale of two markets

The regional divergence running through these figures deserves attention. London, where average rents reached £2,294 per month in May 2026, recorded the lowest rental inflation of any English region — just 2.0% annually. The combination of extreme affordability pressure and a relative uptick in institutional supply (build-to-rent completions in zones 2–4 have added meaningful stock in some boroughs) is keeping a lid on growth.

The North East, by contrast, is experiencing the highest rental inflation in England at 5.9% year-on-year, with average rents of £776 per month — the lowest of any region. Here, the dynamics are different: a smaller absolute market, high proportional landlord exit rates, and limited institutional replacement supply are pushing prices up more sharply on a relative basis.

For investors monitoring yield opportunities, REalyse comparables and transaction data indicate that gross yields in the North East, Yorkshire, the North West, and East Midlands continue to outperform the national average, with many districts sustaining yields of 6% to 8% — compared with 3% to 4% in prime London, where capital values remain elevated and rent growth has flattened.

How the bidding war ban and periodic tenancies are changing behaviour

Two of the Act's less-discussed provisions are already producing measurable behavioural shifts.

The prohibition on bidding wars — making it illegal for landlords or agents to solicit or accept offers above the advertised asking rent — has altered how properties are priced and marketed. Letting agents report that landlords are being more deliberate about initial listing prices, aware that they cannot rely on a competitive bidding process to achieve above-asking rents. In practice, this should mean advertised rents more accurately reflect true market prices — a transparency benefit for tenants that the data will take several months to fully quantify.

The conversion of all tenancies to rolling periodic agreements has had an equally significant early impact on how tenants behave. With security of tenure now embedded in law, there is evidence of reduced churn among established tenants who previously moved pre-emptively to avoid Section 21 risk. This reduced turnover is, counterintuitively, dampening the supply of newly available properties in some markets — reinforcing the tightening that landlord exits have already produced.

For landlords, the shift to Section 8 possession grounds has introduced meaningful operational complexity. The expanded grounds include new provisions covering owner occupation and sale of the property, but each requires documented evidence, proper notice periods, and court proceedings. Landlord Action's Paul Shamplina had warned of a "tsunami" of Section 21 notices ahead of implementation; the court system's ability to process the volume of Section 8 claims that will replace them is a live concern among property professionals.

What the data tells investors and agents right now

Eight weeks into the new regime, the market is adjusting rather than collapsing. The fundamentals — persistent structural undersupply, strong rental demand, and a professional landlord cohort that is largely staying put — remain intact.

But the composition of the market is shifting. Smaller, accidental landlords with single properties and limited compliance infrastructure are the most likely to exit. Larger portfolio landlords, build-to-rent operators, and professionally managed assets are absorbing demand in their place. This institutionalisation of the rental market is a structural trend the Renters' Rights Act will accelerate.

REalyse planning pipeline data shows continued build-to-rent development across Manchester, Birmingham, Leeds, and London, with permitted schemes adding to the institutional supply pipeline. However, delivery timelines mean this stock will not ease pressure in the near term — the gap between today's supply constraints and future BTR completions will be felt acutely by tenants in the market over the next 12 to 24 months.

For property investors, the Act has shifted the required skill set rather than eliminated the opportunity. Understanding which grounds apply for possession, which postcodes still offer viable yields, and how to price rents accurately within the new Section 13 framework is now the baseline. REalyse data — covering active listings, transaction comparables, and gross yield by district — provides the granular market intelligence needed to navigate that complexity with confidence.

Outlook: a market in managed transition

The Renters' Rights Act has not triggered a market collapse, but it has accelerated a structural reshaping of England's private rented sector that was already underway. Supply is tighter. Rents are rising more slowly. Tenants have stronger rights on paper, even as competition for available homes remains fierce in practice.

The next inflection points will come in the months ahead, as the courts absorb the first wave of Section 8 possession claims under the new grounds, as the Private Rented Sector Database and Ombudsman scheme roll out in later phases, and as build-to-rent completions begin to test whether institutional supply can genuinely substitute for departing private landlords at scale.

For now, the data verdict is this: the reforms are working as intended for tenant security, but the supply side has not yet found its new equilibrium. That tension — between stronger tenant rights and a shrinking pool of available homes — is the defining challenge of England's rental market in 2026.