BLOGS

The Renters' Rights Act received Royal Assent on 27 October 2025 and its first phase came into force on 1 May 2026. The changes are sweeping: Section 21 "no-fault" evictions have been abolished, all fixed-term assured shorthold tenancies have converted to rolling periodic agreements, rent increases are capped at once per year with two months' notice, and tenants now have the statutory right to challenge excessive rises at the First-tier Tribunal. Bidding wars have been outlawed. Landlords must reasonably accommodate pet requests. The Decent Homes Standard and Awaab's Law — previously confined to social housing — now apply to the private rented sector.

On paper, the Act represents a generational reset in favour of tenants. In practice, its consequences for the supply side of the market are proving harder to engineer.

The landlord supply squeeze pre-dates the Act — but the Act has accelerated it

The structural tension in the UK rental market did not begin with the Renters' Rights Act. Years of compounding pressures — Section 24 mortgage interest tax relief restrictions, a 5% stamp duty surcharge on second homes, rising buy-to-let mortgage rates, and increasingly costly EPC upgrade obligations — had already eroded landlord margins well before the legislation reached the statute book.

But the Act has sharpened the calculus. According to data from property purchasing firm LandlordBuyer, approximately 93,000 buy-to-let landlords exited the market in 2025. A survey by the National Residential Landlords Association (NRLA) found that 41% of landlords planned to reduce their portfolios over the following 12 months, while only 5% intended to expand. By April 2026, estate agency Hamptons reported that 14% of all homes for sale were former buy-to-let properties — up from under 10% in each of the three preceding years.

The Royal Institution of Chartered Surveyors (RICS) has tracked this decline in real time. Its UK Residential Market Survey recorded landlord instructions at a net balance of -38% in September 2025 — the weakest reading since May 2020 — and subsequent surveys have shown no meaningful recovery. RICS is forecasting rents to rise by approximately 3% over the next 12 months on the back of tightening supply.

REalyse data underscores the severity. Rental listing volumes across England peaked at around 92,000 new listings in June 2025 before falling to approximately 78,000 by March 2026. Average days on market dropped sharply — from over 45 days in late 2025 to below 20 days by March 2026 — a clear sign that available stock is being absorbed faster than it is being replenished.

Demand remains elevated, but the character of that demand is shifting

Tenant demand has moderated from its frenzied 2022–23 peak, but it remains structurally elevated relative to historical norms. Zoopla's rental market data shows weekly enquiries per listing running at around 5.6, compared to a pre-pandemic average of 3.3 between 2017 and 2019. According to NRLA research from Q4 2024, 77% of landlords in England and Wales reported strong demand from prospective tenants.

The picture is more nuanced in 2026. Affordability constraints are visible in the aggregate numbers: Rightmove reported that average advertised rents outside London remained flat at £1,370 per month in Q1 2026 — the first time since 2017 that rents failed to rise at the start of the year. Around 26% of listed properties saw their advertised rent reduced in the same period, the highest proportion since Rightmove began tracking the data in 2012.

Yet this surface-level stabilisation is largely an affordability ceiling, not a genuine correction. HomeLet's Rental Index placed the average UK rent at £1,301 per month in February 2026 — up 2.0% year-on-year, with London at £2,067 per month. ONS private rent data for England showed average rents of £1,386 per month as of early 2026. The Renters' Rights Act's ban on rental bidding has removed one upward pressure on asking rents, but it has not addressed the fundamental imbalance between the number of tenants seeking homes and the number of properties available to let.

For property professionals using REalyse, this divergence between headline stability and underlying pressure is visible at the postcode district level. Days on market in high-demand urban districts remain well below pre-pandemic norms, and yield compression is concentrated in markets where asking rents are bumping against affordability limits rather than supply improving in any meaningful way.

A tale of two rental markets: London versus the regions

Regional dynamics are diverging in ways that reflect the uneven distribution of both supply pressure and regulatory impact.

London stands apart. It was the only region to record a fall in rental stock in late 2025, with available supply in Greater London down around 2.4% and the City of London down 14.1%, according to Rightmove data cited by Inventory Base. Chestertons' spring 2026 data showed London viewings up 4.1% year-on-year and offers up 15% month-on-month — a competitive tenant environment consistent with a market where new landlord instructions have dried up considerably.

Outside the capital, the picture is more varied. Bristol, Leicestershire, Tyne and Wear, Warwickshire, and West Yorkshire all recorded rental stock increases exceeding 60% quarter-on-quarter in late 2025 — though analysts caution that much of this reflects tenants delaying moves in anticipation of the Act's new protections rather than a genuine improvement in supply fundamentals.

The most striking regional data point concerns affordability. Zoopla analysis of the year to April 2026 found that rents in the most affordable markets — those averaging £750 per month or below — rose at more than twice the national rate. Carlisle recorded a 9.1% annual increase, Kilmarnock 9.0%, and Halifax 6.5%. These are markets where the combination of chronically low stock, modest new build pipelines, and a growing cohort of priced-out urban renters is pushing up costs fastest — and where tenant affordability buffers are thinnest.

REalyse planning and development data reflects the structural supply gap that sits beneath these trends. Build-to-rent pipeline completions remain concentrated in a handful of major urban centres, and planning consent rates for new residential schemes have not materially accelerated in the markets where rental pressure is most acute. Without a meaningful supply response, the arithmetic of demand exceeding stock will continue to do its work on rents.

What the Act means for the next 12 months

The weight of evidence points to rents continuing to rise over the next 12 months — albeit at a moderate pace rather than the double-digit rates of 2022–23. RICS forecasts approximately 3% national rent growth. Savills takes a longer view, projecting cumulative rent increases of 17.6% over the next five years, driven by sustained structural undersupply. At a regional level, markets with the lowest current rents and the thinnest supply pipelines are likely to see above-average growth.

For institutional investors and build-to-rent operators, the Act's structural effects are net positive in the medium term: rising rents, reduced competition from smaller private landlords, and a professionalisation of the sector that favours well-capitalised, compliance-ready operators. Gross yields in high-demand regional markets — particularly in the Midlands, North West, and parts of the North East — are attracting renewed institutional interest as private landlord attrition frees up tenant demand without equivalent supply.

For smaller landlords navigating the new regime, the compliance requirements are significant. Registration on the PRS Landlord Database is expected in Phase 2 later in 2026, and mandatory membership of the PRS Landlord Ombudsman is anticipated by 2028. Fines of up to £40,000 are available for repeat offenders. Landlords who remain in the sector will need to price realistically within the statutory rent review framework and invest in properties that meet the Decent Homes Standard and EPC requirements ahead of the 2030 deadline.

Conclusion: reform without supply is not enough

The Renters' Rights Act has achieved something previous governments attempted and failed: it has restructured the legal architecture of the private rented sector in favour of tenants. Security of tenure, clearer recourse, and the end of speculative evictions are genuine gains.

But legislation alone cannot conjure supply. The interaction between a shrinking landlord base, structurally inadequate new build pipelines, and sustained tenant demand means the rental market in mid-2026 is one where tenants have stronger rights yet face fewer homes to choose from. The paradox — better-protected renters competing more fiercely for a smaller pool of properties — is one that only a serious supply-side response can resolve.

For investors, agents, and lenders tracking this market, the data signals are clear: rental demand is durable, supply is constrained, and the next 12 months are likely to see further upward pressure on rents across most of the UK, particularly in markets where affordability has not yet been fully tested.