BLOGS

A rental market under new rules, and new pressure

The Renters' Rights Act has arrived at a pivotal moment for UK landlords and tenants alike. Abolishing Section 21 "no-fault" evictions, tightening rules around rent increases, and extending tenant protections were always going to change how landlords operate. But the reform isn't landing on a stable market — it's landing on one already reshaped by years of tight supply, particularly in London, and rents that remain historically elevated despite recent cooling.

REalyse data shows London asking rents averaging around £2,770 a month over the past 12 months, roughly £600 above the South East and more than double the Scotland and Wales averages. At the same time, active rental listings in London sit near 250,000 — but that pool has contracted by roughly a quarter year-on-year, a supply squeeze that predates the Act and helps explain why landlord behaviour is shifting faster in the capital than elsewhere.

Supply is tightening just as protections expand

Every UK region in REalyse's tracking shows a similar pattern: rental listings volumes down year-on-year, in some cases sharply. Scotland's active listings pool has fallen by around 38% and Wales by roughly 35%, with London and the South East down between 22% and 26%. This isn't isolated to one market — it points to a broader retreat of stock from the private rental sector, whether through landlord sales, portfolio consolidation, or a pause on new lettings ahead of the Act's implementation.

That contraction matters because it works against one of the Act's core aims. Removing Section 21 and requiring more structured grounds for possession is designed to give tenants more security. But if landlords respond by exiting the market, or by becoming more selective about who they let to and on what terms, the practical effect on tenant choice and affordability could cut the other way — particularly in already-constrained markets like inner London.

Rents are still rising in London, cooling elsewhere

Despite the supply pressure, London asking rents have edged up around 1.1% over the past 12 months — modest by the standards of the post-pandemic surge, but still positive. Contrast that with the South East, where rents have dipped roughly 2% over the same period, and Scotland, down closer to 1.2%. This divergence suggests London's demand base — driven by return-to-office patterns, international arrivals and a persistently thin supply pipeline — is proving more resilient to broader UK rental softening.

Property type data reinforces the story. REalyse figures show flats commanding average achieved rents around £2,070 a month with gross yields near 5.2%, while houses (terraced, semi-detached and detached) show yields creeping higher, up to 5.6–5.7% in some categories, alongside longer average days on market of 43–48 days versus 40 for flats. That yield differential is likely to matter more under the new regime: landlords weighing whether to hold, sell or convert stock will be comparing these income returns against the added compliance and management burden the Act introduces.

How landlord strategy is likely to shift

For institutional and portfolio landlords, the calculus is increasingly about scale and professionalisation. Larger operators with dedicated compliance resource are better placed to absorb the Act's new requirements — decent homes standards, extended notice periods, restrictions on rent review frequency — than smaller "accidental" landlords, who make up a significant share of the UK's private rental stock. REalyse's planning and development data suggests continued interest in build-to-rent schemes in London and major regional cities, a structural response to exactly this dynamic: professionally managed, purpose-built rental stock is inherently better positioned to meet the new compliance bar than converted or amateur-managed lettings.

For smaller landlords, the more likely response is consolidation or exit — selling into a sales market that, in some areas, still favours owner-occupiers over investors. Where that happens at scale, it could tighten rental supply further, reinforcing the very rent pressures the Act aims to ease. Brokers and lenders advising landlord clients should expect more enquiries around refinancing, portfolio restructuring and yield recalculation as the new rules bed in.

Outlook: a market recalibrating, not collapsing

Early data doesn't point to a rental market in crisis, but it does show one recalibrating unevenly. London's combination of resilient demand and shrinking supply gives it a different trajectory to the rest of the UK, where rents are broadly flatter and yields more attractive for landlords able to stay in the game. The next 12 months will likely separate landlords who professionalise and adapt from those who quietly step back — and comparables, yield benchmarks and local supply data will be essential for anyone trying to call that shift early.