Landlord Confidence Dips as Regulatory Changes Loom

Landlords across the UK are entering 2026 with diminished confidence, according to recent research by Savills. The upcoming Renters’ Rights Act, combined with the regulatory environment following the November Budget, is prompting many landlords—especially those in prime property sectors—to reassess their outlook. Jessica Tomlinson, a research analyst at Savills, describes the situation as “a fundamental reset of the rental market,” which is reshaping experiences for both landlords and tenants. Although there is still time to prepare for the changes, a clear shift in sentiment is already evident.

Changing Pricing Expectations in Prime Markets

Savills’ survey highlights a narrowing gap between landlords and tenants regarding rent price expectations. Most letting agents operating in prime markets report that renters have anticipated rent reductions over the past three months. However, only half of these agents believe landlords in prime central London expect rents to fall, and in outer prime London, just 20% of agents say landlords foresee declining rents. This divergence suggests that landlords may be less prepared or less willing to accept downward pressure on rents, even as tenant expectations adjust.

Resilience in South West London Rental Values

Despite the overall decline in landlord confidence, some prime London locations continue to demonstrate strong rental performance. South west London, including neighbourhoods such as Wandsworth, Putney, and Barnes, emerged as the strongest prime rental markets in 2025. Savills’ prime lettings index recorded annual rental growth of 6.8% in Wandsworth, 6.3% in Putney, and 5.4% in Barnes. In contrast, prime central London saw a slight quarterly decline of 0.1% in the last quarter of 2025, while outer prime districts remained flat. Prime regional markets experienced a sharper quarterly fall of 1.1%, though annual growth across all segments remained positive, reaching up to 2.4%.

Factors Driving Demand and Rental Stability

Jessica Tomlinson explains that the best-performing prime neighbourhoods in 2025 offered strong transport links, good schools, and access to green spaces, which together create a “clear lifestyle premium.” This sustained demand, particularly from domestic tenants moving for lifestyle reasons, has helped maintain rental values. Additionally, some rental properties were lost to the sales market last year, which has contributed to an imbalance between supply and demand, keeping rental prices competitive despite broader market uncertainties.

What This Means for UK Landlords

The approaching Renters’ Rights Act and ongoing regulatory changes require landlords to carefully consider their strategies. While some prime markets remain robust, the overall decline in confidence and shifting tenant expectations may affect rental income and portfolio management. Landlords should stay informed about legislative developments and market trends to adapt effectively. Preparing for regulatory compliance and understanding local market dynamics will be essential to maintaining sustainable rental returns in 2026 and beyond.