Rental Supply Remains Under Pressure Despite Stable Tenant Demand

The Royal Institution of Chartered Surveyors (RICS) has reported that rental supply in the UK is still falling, even as tenant demand remains broadly stable over the three months to February 2026. The latest UK Residential Market Survey highlights a continued decline in landlord instructions, signalling ongoing challenges for the private rented sector. This imbalance between supply and demand could maintain pressure on rental prices and availability, an important consideration for landlords and letting agents managing portfolios.

Market Confidence Affected by Geopolitical and Economic Factors

RICS points to geopolitical tensions, including the recent Middle East conflict, and wider macroeconomic uncertainty as key factors influencing short-term market expectations. Tarrant Parsons, head of market research at RICS, noted that February’s survey “highlights renewed volatility in the market.” He explained, “While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.”

Additionally, rising oil and energy prices have increased the likelihood that mortgage rates will stay higher for longer, further softening near-term expectations. For landlords, this environment may translate into cautious investment decisions and slower property turnover.

House Prices Show Regional Variations and Moderate Growth

The survey also reveals that new buyer enquiries weakened again in February, with agreed sales declining. However, surveyors remain cautiously optimistic about increased sales activity over the next year, expecting higher sales volumes.

House prices have seen a small rise overall, though London experienced a fall in property values. In contrast, regions such as Northern Ireland, Scotland, and the North West of England reported firmer price trends. Despite these variations, RICS expects house prices to continue rising over the year, albeit at a slower rate than previously forecast.

For landlords, understanding these regional differences is crucial when considering portfolio diversification or potential sales.

Industry Experts Reflect on Market Sentiment and Future Prospects

Tom Bill, head of UK residential research at Knight Frank, commented on the impact of recent events: “Demand had been recovering after the uncertainty caused by November’s Budget, but the Middle East conflict will dampen sentiment during a traditionally busy period for housing transactions.” He added, “People will still need to move but geopolitical instability will increase the mood of hesitation while rising mortgage rates due to energy price spikes will curb spending power.”

Bill also noted that a weak labour market supports the case for multiple interest rate cuts later in the year, with the longer-term market impact depending on the duration of current disruptions.

Tim Green of Green & Co observed early signs of recovery with an increased number of properties coming to market, particularly from first-time buyers. However, he acknowledged that “Spring has not quite arrived yet,” and that confidence has declined since the Iran conflict began, with several respondents citing it directly.

These insights suggest landlords should prepare for continued market caution but also potential opportunities as conditions evolve.

What This Means for UK Landlords and Agents

The ongoing fall in rental supply amid steady tenant demand indicates a potentially tighter rental market, which could support rental income growth for landlords but also requires careful management of tenant expectations. The combination of geopolitical uncertainty and elevated mortgage rates may slow property transactions and affect landlord decisions on acquisitions or disposals.

Landlords and agents should monitor regional price trends and market sentiment closely, adapting strategies to navigate volatility while remaining alert to signs of recovery, particularly in the first-time buyer segment.

Understanding these dynamics will be key to managing risks and capitalising on opportunities in the UK residential property market throughout 2026.

Suggested internal link anchors

• rental supply
• tenant demand
• mortgage rates
• house price trends
• geopolitical impact on property
• UK residential market
• landlord instructions
• property sales volumes
• regional property values
• market confidence
• first-time buyers
• private rented sector

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/