Housing Market Stabilises with Regional Variations

The Royal Institution of Chartered Surveyors (RICS) has reported signs of stabilisation in the UK housing market, with house prices showing early indications of recovery in the first months of 2026. Nationally, the net balance for house prices over the past three months improved to -10%, up from a low of -19% in October 2025. This suggests a slowing in price declines and a tentative return to growth.

However, this recovery is uneven across the country. Price growth remains strongest in Scotland and Northern Ireland, with positive trends also reported in the North West and the North of England. Conversely, London, the South East, South West, and East Anglia continue to experience weaker market performance, lagging behind other regions.

New buyer enquiries have also improved, rising to a net balance of -15% in January 2026, compared to -21% in December 2025 and -29% in November 2025. This easing of downward pressure on demand may support further market stabilisation if sustained.

Rental Market Faces Rising Pressure from Limited Supply

Despite the signs of recovery in sales, the lettings market is experiencing continued supply constraints. Tenant demand has increased slightly, with a net balance of +13% reported in the three months to January 2026, ending two quarters of flat or negative demand readings.

However, landlord instructions have declined significantly, with a net balance of -24%, indicating fewer properties are being made available to rent. This imbalance between tenant demand and rental supply is pushing rents higher, with a net balance of +28% of RICS respondents expecting rental prices to rise in the near term.

For landlords and letting agents, this means rental income may increase but sourcing new tenants could become more competitive due to limited stock. Maintaining properties to a high standard and effective tenant retention strategies will be important in this environment.

Market Outlook Remains Cautiously Optimistic

Simon Rubinsohn, RICS chief economist, commented on the current market conditions: “There are early signs that market conditions may be improving after a challenging period, although activity levels are still subdued, meaning any recovery is likely to be gradual. While the strengthening twelve-month outlook is encouraging, near-term expectations remain relatively soft, reflecting ongoing economic uncertainty.”

He added, “Whether this tentative improvement develops into sustained momentum will depend heavily on the trajectory of mortgage rates and broader macro confidence over the coming months.”

Looking ahead, RICS reports that expectations for sales over the next three months have eased to a net balance of +4%, reflecting some short-term caution. However, optimism over the next twelve months has increased substantially, reaching +35%, the strongest reading since December 2024. Similarly, price expectations are positive, with 43% of respondents anticipating higher prices over the coming year, the most upbeat outlook since February 2025.

What This Means for UK Landlords and Agents

The stabilisation of house prices combined with rising rents presents a mixed picture for landlords. While property values may no longer be falling sharply, the constrained supply in the rental market offers opportunities to increase rental income. However, landlords should be mindful of economic uncertainties and potential mortgage rate fluctuations that could affect tenant demand and affordability.

Letting agents may see increased competition for available rental properties, emphasising the importance of efficient property marketing and tenant management. Monitoring regional market differences will also be crucial, as some areas continue to lag behind in recovery.

Suggested internal link anchors

• UK rental market trends
• house price stabilisation
• tenant demand
• landlord instructions
• rental price increases
• regional housing disparities
• mortgage rates impact
• lettings market supply
• property management strategies
• economic uncertainty in housing

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/