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A new era for the private rented sector

The Renters' Rights Act, which received Royal Assent in May 2025, represents the most sweeping overhaul of England's private rented sector in a generation. The abolition of Section 21 "no-fault" evictions, the end of fixed-term assured shorthold tenancies, new mandatory possession grounds under Section 8, and the extension of the Decent Homes Standard to private landlords have collectively shifted the balance of power firmly toward tenants.

But regulation rarely lands evenly. While the policy intent is to create greater security for renters, the early evidence points to a more complicated picture: reduced landlord supply in the markets most exposed to tighter rules, persistent demand from tenants, and rents that — far from falling — are still rising sharply in many parts of the country.

Scotland and Wales, which moved earlier with their own reforms (the Private Housing (Tenancies) (Scotland) Act 2016 and the Renting Homes (Wales) Act 2022 respectively), offer a preview of what England may now experience. Both markets saw an initial contraction in available rental stock as landlords reassessed their positions — a pattern that England's data is beginning to replicate.

The supply squeeze: landlords are leaving

The most direct market consequence of the Act has been on the supply side. Landlord sentiment surveys from bodies including the National Residential Landlords Association have consistently shown that a meaningful share of private landlords — particularly smaller portfolio holders with one or two properties — have been actively considering or completing a sale rather than navigating the new legislative environment.

This trend sits on top of already-significant headwinds: the phased removal of mortgage interest tax relief (Section 24), increased Stamp Duty Land Tax surcharges on second homes, and higher interest rates that have compressed buy-to-let margins since 2022. For many landlords, the Renters' Rights Act was the final straw rather than the first.

REalyse data shows that active rental listings in several English regions declined materially in the twelve months following the Act's passage, with the sharpest falls concentrated in Greater London, the South East, and the East of England — markets where landlord leverage had historically been strongest and where the regulatory shift is therefore most disruptive to existing business models.

Zoopla and Rightmove data have pointed in the same direction nationally, with available rental stock per active searcher remaining well below pre-pandemic norms in most urban markets — a structural undersupply that the Act alone cannot solve.

Where rents are rising fastest

Against this backdrop of constrained supply, tenant demand has not moderated. ONS private rental index data shows annual rent inflation running above 6% across Great Britain in early 2026, with regional variation that tells a more nuanced story.

London remains the most acute pressure point. Average asking rents in the capital have been testing record levels, with Inner London boroughs — Hackney, Islington, Southwark, Tower Hamlets — seeing particularly strong upward pressure as institutional landlords and purpose-built build-to-rent operators absorb demand that smaller private landlords are vacating. REalyse data indicates that average asking rents across Greater London postcodes are running approximately 7–9% above the same period last year.

The North West and Yorkshire have moved up the ranking significantly. Manchester, Leeds, and Sheffield — cities that attracted significant build-to-rent investment over the past five years — are now seeing annual rent growth of 6–8% according to Rightmove's quarterly rental tracker. The combination of strong graduate retention, growing professional populations, and a relatively thin private rented sector (compared to London) means demand absorption capacity is lower than headline supply numbers suggest.

The South West is another region where rental pressure has intensified sharply. Bristol consistently ranks among the most unaffordable rental markets outside London, and coastal and rural areas of Devon and Cornwall — already stretched by post-pandemic lifestyle migration — are showing signs of structural undersupply that local planning pipelines are not positioned to address quickly.

Scotland, despite having already abolished fixed-term tenancies and implemented a temporary rent cap under the Cost of Living (Tenant Protection) (Scotland) Act 2022, is not immune. Edinburgh in particular continues to record asking rent inflation above the national average, with REalyse comparables data showing prime city-centre flats regularly achieving rents 10–12% above levels seen in 2023.

Which regions are most exposed to regulatory risk

Not all markets face equivalent regulatory exposure. The degree of risk for landlords — and, by extension, for tenants who depend on a healthy private rented sector — correlates with three factors: the proportion of housing stock in private rental tenure, the prevalence of smaller landlords (versus institutional operators who are better equipped to absorb compliance costs), and local planning pipelines that could relieve supply pressure over the medium term.

On this basis, REalyse analysis identifies three tiers of regional exposure:

High exposure: London, the South East, and Bristol

These markets combine high private rental tenure shares, historically dominated by individual landlords rather than institutions, with planning pipelines that — while active — are still measured in years rather than months. The abolition of Section 21 removes a key tool that landlords in these markets used to manage tenancy succession efficiently, and the shift to periodic tenancies introduces uncertainty around void periods and possession timelines that smaller operators find hardest to price.

Gross rental yields in these markets have already been compressed by high capital values — REalyse data shows gross yields for London flats averaging in the 4–5% range — leaving limited buffer for increased compliance costs, higher management fees, or extended void periods under the new possession framework.

Moderate exposure: Manchester, Leeds, Birmingham, and the East of England

These markets have benefited from stronger build-to-rent pipelines, which means institutional supply is growing and can partially offset departing private landlords. However, the private rented sector still makes up a substantial share of housing stock, and the pace of new-build delivery is uneven. Yields are more attractive — REalyse data suggests gross rental yields of 5–7% are achievable across many East Midlands and North West postcodes — providing more headroom, but regulatory complexity remains a material consideration for smaller investors.

Lower (but not zero) exposure: Wales and Scotland

Both nations moved earlier and have already largely adapted to their respective frameworks. Scotland's open-ended tenancy model and Wales's occupation contract system mean the operational adjustment required by the Renters' Rights Act (which applies in England only) is not directly relevant. That said, broader trends — higher interest rates, tax changes, and investor sentiment — are not ring-fenced by national borders.

The build-to-rent offset: necessary but insufficient

One counterweight to the landlord exodus is the continued growth of the build-to-rent (BTR) sector. Institutional operators — large enough to absorb compliance costs, underwrite new possession procedures, and invest in property management infrastructure — are expanding in many of the markets where private landlords are retreating.

REalyse planning data shows a meaningful BTR pipeline across English cities, with schemes at various stages of planning and construction in London, Manchester, Birmingham, Leeds, and Bristol. However, BTR typically targets the mid-market to premium renter demographic, and delivery timelines mean that even a buoyant pipeline offers limited near-term relief to tenants priced out of an undersupplied market today.

The mismatch between where regulated private landlords are exiting (affordable and mid-market rental accommodation) and where BTR is entering (mid-market and above) is a structural gap that neither legislation nor the market is currently equipped to close quickly.

Outlook: higher rents before the market rebalances

The Renters' Rights Act is the right long-term direction for tenant security. But the short- to medium-term evidence strongly suggests that the transitional cost will be borne disproportionately by tenants themselves, through tighter availability and higher rents — precisely the opposite of the policy's stated ambition.

The markets most at risk are those where private landlord supply was already declining, where affordability was already stretched, and where the BTR pipeline cannot fill the gap quickly enough. REalyse data will continue to track rental supply, achieved rents, yield compression, and planning activity across every postcode district in England, Scotland, and Wales — providing the granular intelligence that investors, developers, and lenders need to navigate what remains a rapidly shifting landscape.

For landlords and investors reassessing their positions under the new framework, data-led decision-making is not optional — it is the only rational response to a market in transition.