Rental market

The rental market refers to the overall landscape in which private landlords let rental property to tenants in exchange for rental income. It is shaped by supply and demand, economic conditions, legislative change, and regional variation in property values and tenant demographics.

In 2026, the UK rental market is operating under significant pressure. Demand from tenants continues to outstrip supply in most regions, driven by rising house prices, higher mortgage rates, and a growing population of long-term renters. At the same time, a number of private landlords have exited the private rented sector in recent years, citing increased regulation, the removal of mortgage interest relief under Section 24, and the compliance burden of meeting minimum energy efficiency standards. This contraction in supply has contributed to rising average rents across much of England and Wales.

The Renters' Rights Act, represents the most significant structural change to the rental market in a generation. The abolition of fixed-term tenancies and Section 21 no-fault evictions means all tenancies will become assured periodic tenancies from the commencement date. Landlords will need to rely on defined grounds for possession under Section 8 when seeking to recover a property. The Act also introduces mandatory registration with the PRS Database and compulsory membership of a PRS Ombudsman scheme.

For landlords, understanding the rental market means tracking rental yield, local void periods, and tenant demand in their area. Rental yields vary considerably by region, with higher gross yields typically found in northern cities and lower yields in London and the South East, where capital values are higher relative to achievable rents.

Staying informed about market conditions helps landlords set competitive rents, minimise void periods, attract reliable tenants, and make sound decisions about their property portfolio. Monitoring regulatory change is equally important: the costs of non-compliance, including civil penalty notices and banning orders, have increased substantially in recent years.

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