Renters Rights Act drives London rent rises amid tighter supply
Rents in Greater London have increased by 6.1% year-on-year in September, following the introduction of the Renters Rights Act. The legislation has influenced landlords to list higher initial rents as supply tightens and rent increase controls limit annual rises.
Advertised rents for properties in Greater London reached an average of £2,448 in September, marking five consecutive months of year-on-year growth since the Renters Rights Act came into force. However, the pace of increase has slowed from 9.8% in August. Despite this moderation, rents remain nearly 13% above levels seen earlier in the year between January and April.
The online letting agency Hello Neighbour, which operates primarily in London and other major cities, attributes this trend to a combination of reduced supply and the new rent regulation framework. According to the agency, the number of homes available to rent in London has fallen by 6% compared to the previous year, with inner London experiencing a sharper 13% decrease in available rental properties.
Impact of the Renters Rights Act on landlord pricing strategies
Hello Neighbour highlights that since the Renters Rights Act’s implementation in May, landlords are no longer permitted to accept offers above the advertised asking rent, and rent increases are restricted to once per year. This has encouraged landlords to set higher initial rents to compensate for the capped ability to raise rents during a tenancy.
The agency notes that many landlords have confirmed this behavioural shift in pricing strategy, with higher advertised rents reflecting an adjustment to the new legal environment. This change aims to protect tenants from sudden rent hikes but has the side effect of pushing up starting rents.
Despite these higher listings, Hello Neighbour expects actual achieved rents to grow more slowly than advertised rents for the remainder of 2026, due to affordability constraints in London. The agency also observes ongoing hard negotiation on initial rent levels between landlords and prospective tenants.
Supply and demand dynamics under the new rental regime
While supply has contracted, demand for rental properties has remained relatively steady but below previous years’ levels. Hello Neighbour recorded 34 enquiries per property in September, down from 40 in August, and significantly lower than 45 enquiries per property in September 2025 and 65 in September 2023.
This decline in demand per property may reflect the impact of higher rents and limited supply, as well as broader economic factors. The agency points to Zoopla’s Rental Market Report, which links the reduced supply partly to elevated mortgage rates that discourage first-time buyers from entering the property market, thereby extending their time in rental accommodation.
With interest rates expected to rise further, Hello Neighbour anticipates the trend of reduced supply and sustained demand to continue, potentially maintaining upward pressure on rents in London.
Context and implications for landlords and agents
The Renters Rights Act represents a significant shift in tenancy regulation, particularly in London where rental demand and prices are historically high. By limiting rent increases to once a year and banning acceptance of offers above the advertised rent, the legislation aims to enhance tenant security and affordability.
For landlords, this means recalibrating rent-setting strategies to balance compliance with the Act and financial viability. The practice of listing higher initial rents is a direct response to the inability to raise rents mid-tenancy, but it may also reduce the pool of prospective tenants able or willing to pay these prices.
Letting agents must adjust their marketing and negotiation approaches, advising landlords on compliant rent levels and managing tenant expectations. The observed decline in enquiries per property suggests that landlords and agents may face longer void periods or increased negotiation to secure tenants at higher rents.
Practical considerations for landlords under the Renters Rights Act
Landlords should review their rent-setting policies to ensure advertised rents reflect realistic achievable levels within the new legal framework. Careful documentation of rent levels and any negotiations will be important to demonstrate compliance with the Act’s restrictions.
Monitoring local market supply and demand dynamics will help landlords anticipate changes and adjust strategies accordingly. Affordability remains a key constraint, especially in London, so landlords should be prepared for potential tenant pushback on higher initial rents.
Regular communication with letting agents and tenants about the implications of the Renters Rights Act can help manage expectations and reduce conflicts. Landlords should also stay informed of any further regulatory updates or guidance from government and industry bodies.
Remaining uncertainties and future outlook
While the Renters Rights Act has introduced clear rules on rent increases and offer acceptance, some practical uncertainties remain. The long-term impact on rental supply is not yet fully clear, particularly whether landlords may withdraw properties from the market in response to reduced rent flexibility.
The interplay between mortgage rates, demand from first-time buyers, and rental market conditions will continue to evolve, influencing supply and rent levels. It is also uncertain how other cities outside London will respond to the Act’s provisions and whether similar trends will emerge nationally.
Landlords and agents should watch for further data and analysis on rental market performance and remain vigilant to any changes in enforcement or interpretation of the Act.
Supporting landlords through regulatory change with TLA
The Landlord Association (TLA) offers members tailored resources to help manage compliance with the Renters Rights Act and related rental reforms. Through membership, landlords and letting agents can access up-to-date guidance on rent-setting, documentation, and tenant communication strategies.
TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is designed to assist members in organising rental portfolios and maintaining records of key tenancy actions. ORBIT aims to support landlords in recording rent levels, managing rental documents, and tracking compliance with changing regulations.
Exploring TLA membership provides practical support and tools to adapt to the evolving rental regulatory environment and maintain effective property management practices.
Looking ahead, landlords should remain attentive to market signals and regulatory developments to optimise their rental strategies within the framework established by the Renters Rights Act.
Sources: Landlord Today
TLA - The Landlord Association