BLOGS

A landmark reform meets a tight rental market

The Renters' Rights Act 2025 received Royal Assent on 27 October 2025, and its core provisions — the abolition of Section 21 "no-fault" evictions, mandatory periodic tenancies, a ban on rental bidding wars, and a cap on rent-in-advance payments — took effect from 1 May 2026. It is widely regarded as the biggest shake-up of England's private rented sector since the Housing Act 1988, touching an estimated 11 million renters and 2.3 million landlords.

For institutional investors, lenders and agents, the interesting question was never whether the legislation would pass. It was how landlords would actually respond once the rules bit — through pricing, portfolio decisions, and letting behaviour — and whether that response would differ across the UK's high-demand cities. Twelve months on from the Bill's introduction, REalyse rental listings data gives an early read on that behaviour shift.

What the data shows: rents, yields and timelines diverge by city

Pulling REalyse rental listings across London, Manchester, Birmingham, Leeds, Bristol and Edinburgh over the past 12 months shows a market that is far from uniform. Average asking rents range from roughly £1,200 a month in Birmingham to over £3,300 in London, but the more telling divergence is in yield and velocity — the two metrics landlords are watching most closely as compliance costs rise.

• London: highest absolute rents (~£3,300/month, ~£51/sqft annualised) but the lowest average gross yield of the six cities, at under 5%. Days on market sit around the mid-30s, and listings volume dwarfs every other city — a reflection of London's sheer scale as a rental market, but also a sign that supply has not visibly contracted.

• Leeds and Manchester: yields of 6.7%–7.1%, among the strongest in the sample, with days on market broadly in line with the national picture. These northern hubs continue to attract yield-focused buy-to-let and portfolio investors even as compliance obligations tighten.

• Birmingham: the fastest-letting market in this set at roughly 35 days on market, combined with a solid ~6.3% yield — consistent with strong tenant demand relative to available stock.

• Edinburgh: the shortest average time to let (around 31 days), reflecting Scotland's already-mature rent-pressure and tenant-protection framework, which has operated similarly to what England is now adopting.

• Bristol: the lowest yield outside London (under 6%) alongside relatively high £/sqft rents (~£29), suggesting the market is pricing more like a satellite of London than a typical regional city.

The headline finding: days on market across all six cities remain remarkably tight — clustered between roughly 31 and 38 days — with no sign yet of the letting slowdown some landlords feared once tenant-friendly reforms landed. If anything, this points to demand comfortably absorbing available stock, keeping void periods short even as landlords adjust tenancy terms and screening practices.

Landlord behaviour: caution, not capitulation

Sector surveys around the Act's passage painted a dramatic picture — the NRLA reported that around 68% of landlords were considering selling up, and Cushman & Wakefield modelled a potential 5% net reduction in private rental stock. Nearly half of landlords surveyed by Landbay said they planned rent increases in response to the reforms, averaging roughly 6%, or about £74 a month on a typical tenancy.

But actual market behaviour has been more measured than the survey sentiment implied. Analysis by Benham and Reeves found rental stock available across England grew by around 23.5% in the period since the Bill was introduced, with the strongest increases in Bristol, West Yorkshire, Tyne and Wear, East Sussex and Northumberland — and even London posting an 11% rise in available stock. Only a small number of local markets, including parts of Herefordshire and Gloucestershire, recorded declines.

This is consistent with what REalyse listings data implies: high-demand cities are not showing the supply collapse that headline landlord surveys warned of. What is changing is composition and process, not necessarily volume — landlords are tightening referencing, leaning more heavily on professional agents, and pricing more conservatively at the point of listing to avoid rent-increase disputes at the First-tier Tribunal (where tenants can challenge a Section 13 rent rise for a £47 fee).

What this means for investors, lenders and agents

For portfolio investors and developers, the current window looks less like a retreat and more like a repricing opportunity. Some professional landlords are actively adding to portfolios, citing resilient yields and softer competition from smaller, less compliance-ready owners who are more likely to exit. Cash and near-cash buyers continue to represent a meaningful share of new-build purchases in London, some of which are landlords positioning to list ahead of peak lettings season.

For lenders and credit teams, the divergence in yield and days-on-market by city is a useful underwriting input: markets like Leeds, Manchester and Birmingham currently combine above-average yield with fast absorption, a combination that supports rental-coverage assumptions on buy-to-let lending, while London's compressed yields warrant closer scrutiny of rent growth assumptions used in affordability stress tests.

For agents and valuers, the practical takeaway is procedural rather than sentimental: with fixed-term tenancies gone and all tenancies converting to periodic agreements, and Section 21 no longer available as of 1 May 2026, tenant referencing quality and documentation standards now directly affect a landlord's ability to regain possession. Agents who can demonstrate low arrears and strong referencing — as Knight Frank has noted — are likely to capture a growing share of instructions from risk-averse landlords.

Outlook

The next 12–18 months will be the real test. Enhanced local-authority enforcement powers are already active since December 2025, the Private Rented Sector Database begins its regional rollout from late 2026, and the Decent Homes Standard for the private rented sector is not due until 2035 — giving landlords a long runway to adjust rather than a cliff edge. REalyse will continue tracking asking-to-achieved rent discounts, days on market and yield trends across high-demand cities as the reforms bed in, watching in particular for any lagged supply response once the initial compliance deadlines pass and landlords with marginal portfolios make their final decisions.