RICS warns rent rises to continue as rental stock declines
The Royal Institution of Chartered Surveyors (RICS) reports ongoing rental stock shortages in the UK, with landlord numbers falling and rents expected to rise further amid regulatory and affordability pressures.
The latest RICS market snapshot reveals that the supply of rental properties continues to shrink as landlords reduce portfolios or exit the sector. Tenant demand remains steady but landlord instructions to let properties have declined sharply, signalling a tightening market. Meanwhile, expectations for rent increases remain strong, indicating continued upward pressure on rental prices in the near term.
RICS Chief Economist Simon Rubinsohn highlighted that recent regulation rounds are impacting landlord behaviour, contributing to the supply decline. The report also notes that the sales housing market remains subdued, with buyer demand and agreed sales showing little recovery, adding further stress to housing availability.
RICS survey details on rental market supply and demand
The RICS survey, which gathers sentiment from member agents nationwide, shows tenant demand as broadly flat in the quarter ending July, with a net balance of -1%, down from +12% previously. This suggests tenant interest in renting remains stable but is not growing.
In contrast, landlord instructions to let properties are firmly negative at -27%. This indicates a significant number of landlords are either shrinking their portfolios or leaving the rental market altogether. The shortage of good-quality rental stock persists, with agents citing taxation, regulatory burdens, and affordability challenges as key factors influencing landlord decisions.
Despite the supply squeeze, expectations for rent rises remain positive, with a net balance of +28% of respondents anticipating higher rents over the next three months, up from +25% previously. This reflects the ongoing imbalance between supply and demand in the private rented sector.
Context of regulatory and market pressures on landlords
The rental sector is navigating a complex environment shaped by increased regulation, tax changes, and affordability constraints for tenants. Recent legislative reforms have introduced stricter safety and energy efficiency standards, as well as changes to tenancy laws, which have raised compliance costs for landlords.
These factors, combined with rising costs for property maintenance and mortgage finance, have led some landlords to reconsider their position in the market. The reduction in rental stock partly reflects these pressures, as some landlords sell properties or convert them to other uses.
The supply shortage is exacerbated by limited new construction and constrained sales market activity. RICS notes that new vendor instructions and buyer enquiries remain low, which restricts the flow of properties entering the rental market via sales and lettings.
Practical implications for landlords and letting agents
For landlords managing small portfolios, the current market conditions mean increased competition for tenants and potential for rent increases. However, landlords must balance rent rises with tenant affordability to avoid longer void periods or increased arrears risks.
Letting agents may find themselves managing fewer new instructions but facing strong demand from tenants seeking quality rental homes. This environment calls for careful tenant vetting and proactive communication about rent levels and tenancy terms.
Landlords should also remain vigilant about compliance with evolving regulations, particularly those affecting property standards and tenant rights, to minimise legal risks and maintain property attractiveness.
Uncertainties and what landlords should monitor
While the near-term outlook suggests continued rent rises and supply constraints, the longer-term trajectory remains uncertain. Potential policy changes, economic shifts, or market interventions could alter landlord incentives and tenant demand.
Landlords should watch for updates on regulatory frameworks, tax policies, and housing market indicators. Monitoring local licensing requirements and staying informed about safety and energy efficiency obligations will be critical to maintaining compliance and portfolio viability.
Additionally, the impact of broader economic factors such as interest rates and inflation on tenant affordability and landlord costs should be closely followed.
Considerations for landlords amid ongoing market challenges
- Review portfolio performance and assess the impact of regulatory and tax changes on profitability.
- Ensure all rental properties meet current safety and energy efficiency standards to avoid enforcement actions.
- Maintain clear records of rent reviews, tenant communications, and compliance activities.
- Evaluate rent levels carefully to balance income goals with tenant retention and affordability.
- Stay informed on local licensing schemes and any upcoming legislative changes affecting lettings.
Supporting landlords with compliance and management tools
TLA membership offers landlords access to up-to-date compliance resources and practical guidance tailored to the evolving rental market. Members can benefit from document templates, checklists, and expert advice to help meet safety and regulatory obligations.
Additionally, TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is being developed to assist landlords and letting agents in organising property portfolios, managing rental documentation, and recording key compliance actions. ORBIT aims to streamline the management of tenancy records and help maintain evidence of compliance with safety and regulatory standards.
Exploring TLA membership and ORBIT access can support landlords in navigating ongoing market pressures and regulatory demands more efficiently.
Looking ahead, landlords and agents should prepare for continued market tightness and regulatory evolution, balancing rent strategies with compliance and tenant relations to sustain their portfolios.
Sources: Letting Agent Today
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