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Tag: UK Rental Market

  • Renters’ Rights Act: What the Rental Overhaul Means for UK Mortgage Market in 2026

    Renters’ Rights Act: What the Rental Overhaul Means for UK Mortgage Market in 2026

    The Renters’ Rights Act, which came into effect on 1st May 2026, has brought about the most significant changes to the rental sector in the last 40 years. It offers new rights and protections to some 11 million tenants, including a ban on Section 21 ‘no-fault’ evictions. This legislative shift has implications for landlords, lenders, and investors, with penalties of up to £40,000 for non-compliance.

    Implications for Landlords

    Changes to Eviction Notices

    Landlords can now only evict tenants under Section 8 notices if there is a breach of the tenancy contract. This change means that any Section 21 notices served before 1 May or already progressing through the court are allowed to continue. This shift in eviction rules has led to apprehension among landlords, with a recent survey from Pegasus Insight finding that 80% of landlords are concerned about the changes.

    Impact on Business and Market

    Approximately 70% of landlords believe the Renters’ Rights Act will negatively impact their business, and 77% think it will have a negative effect on the overall market. For example, a landlord with a £200,000 interest-only Buy to Let (BTL) mortgage could see a potential increase in void periods due to the new eviction rules, impacting their rental yield. However, it’s important to note that Pegasus Insight’s tenant research indicated stability, with most tenants planning to stay in their property for the foreseeable future.

    Market Context

    Stability in the Rental Market

    Despite landlords’ concerns, the tenant research by Pegasus Insight showed stability in the rental market. The typical renter has lived in the same home for at least five years, and two-thirds plan to stay in their property for another 4.3 years on average. This stability is critical for lenders and investors as it underpins income predictability and reduces risk across the sector.

    Trends in Property Sales

    With some landlords expressing an intention to sell up because of the Renters’ Rights Act, Auction House reported a 70% annual rise in tenanted properties sold through its weekly online auctions in April. Philippa Martinez, regional sales manager for Auction House Kent, suggested that some landlords may have been too quick to act, leading to a surge in property sales.

    Frequently Asked Questions

    What is the Renters’ Rights Act?

    The Renters’ Rights Act is a new legislation that came into effect on 1st May 2026. It offers new rights and protections to 11 million tenants in the UK, including a ban on Section 21 ‘no-fault’ evictions.

    How does the Renters’ Rights Act affect landlords?

    The Act affects landlords by changing the rules around eviction notices. Now, landlords can only evict tenants under Section 8 notices if the tenancy contract is breached. Non-compliance can result in penalties of up to £40,000.

    What does the Renters’ Rights Act mean for the rental market?

    While 77% of landlords believe the Act will have a negative impact on the market, tenant research indicates stability. Most renters plan to stay in their property for the foreseeable future, which could underpin income predictability and reduce risk in the rental sector.

    Have landlords been selling properties because of the Renters’ Rights Act?

    Yes, some landlords have been selling their properties due to the Act. Auction House reported a 70% annual rise in tenanted properties sold through its weekly online auctions in April 2026.

  • UK Rental Market Stability Amid Rising Buy-to-Let Mortgage Rates

    UK Rental Market Stability Amid Rising Buy-to-Let Mortgage Rates

    UK Rental Market Trends in Q1 2026

    As of April 2026, the average advertised rent for homes outside London has remained steady from Q4 to Q1 at £1,370 per month, marking the first time since 2017 that rents have not increased quarter on quarter. In contrast, within London, rents rose by 0.7% from Q4 2025 to Q1 2026, reaching £2,736 per month, according to the latest index from Rightmove. Year on year, average rents outside of London are still 1.6% higher, and within the capital, they have risen by 1.4%.

    The average rental home now receives eight enquiries, down from 11 a year ago and significantly lower than the 29 at the 2022 peak. More than a quarter of rental listings have had their price reduced, the highest proportion for this time of year since Rightmove began recording this metric in 2012. Despite these changes, Rightmove reports no major signs of shifts in market dynamics ahead of the Renters’ Rights Act coming into effect on May 1, 2026.

    Supply and Demand in the Rental Market

    The number of available homes to rent is now 3% higher than a year ago, with supply at its highest level for this time of year since 2021. Despite the increase in supply, demand remains strong, with Chestertons head of residential Adam Jennings noting a clear pick-up in lettings activity, particularly towards the end of March 2026, with a noticeable increase in viewings and agreed lets.

    Impact of Rising Buy-to-Let Mortgage Rates

    The average two-year buy-to-let mortgage rate for a landlord with a 25% deposit is now 5.79%, up by 93 basis points from 4.86% before the war in Iran started. To put this into perspective, a landlord with a £200,000 interest-only buy-to-let mortgage would see their monthly cost rise from £810 to £965, an increase of £155 per month or £1,860 per year. This significant increase in borrowing costs for landlords may filter through to the market at a later stage, potentially putting upward pressure on rents.

    Market Outlook Amid Regulatory Changes and Global Events

    With the Renters’ Rights Act coming into force from May 1, 2026, there has understandably been some uncertainty among landlords. Despite this, the strength of demand seen in late March 2026 has provided reassurance, with many landlords continuing to see competitive levels of interest and strong rental values. The impact of the war in Iran on borrowing costs and the forthcoming Renters’ Rights Act will be key factors to watch in the coming months, as they could both have significant implications for the UK rental market.