Landlords and tenants sharply divided on rent expectations
Savills’ latest analysis reveals a significant gap between landlord and tenant expectations on rent levels in prime UK markets, with landlords anticipating increases while tenants largely expect stability or falls.
Savills has reported a growing misalignment between landlords and tenants over rental values across prime locations in the UK. The agency’s recent snapshot shows that about half of landlords are considering reviewing rents upwards, driven largely by increased costs linked to the Renters Rights Act (RRA) and other financial pressures.
According to Savills, 82% of agents in London say landlords expect rents to rise, whereas only 30% of tenants share this view. This divergence highlights tensions in the rental market as regulatory changes and cost pressures impact landlord decisions.
Details from Savills’ prime rental market survey
The survey conducted by Savills covers prime rental markets across the UK, including London and regional centres. It found that rental values grew moderately in the second quarter of 2026, with prime regional markets rising by 1.3%, outer prime London by 1.2%, and prime central London by 0.4%. This suggests a slow but steady upward trend in rents despite wider economic challenges.
Landlords are increasingly seeking to offset higher operating costs resulting from new regulations, taxation, and borrowing expenses. The Renters Rights Act, which abolished Section 21 no-fault evictions, was cited by many landlords as a primary concern. Nearly half of Savills agents in London and 71% outside the capital identified the RRA as the main issue affecting landlords’ rental strategies.
Savills notes that some landlords are exploring sales options due to the RRA, reducing available rental stock and further supporting rent growth in affected markets. The agency’s analysis suggests that regulatory changes are a key driver behind landlords’ decisions to increase rents.
Context of the Renters Rights Act and landlord concerns
The Renters Rights Act represents a significant shift in UK tenancy law, particularly through the abolition of Section 21, which previously allowed landlords to regain possession without a reason. This change has increased landlords’ perceived risks and costs, prompting many to reconsider rent levels to maintain profitability.
Alongside the RRA, landlords are also contending with rising mortgage interest rates and higher taxes, which compound the financial pressures on rental income. These factors create a challenging environment for landlords managing small to medium portfolios, who must balance compliance with maintaining viable returns.
Tenants, on the other hand, appear less convinced that rents will rise, reflecting either a belief that market forces will keep rents stable or concerns about affordability amid economic uncertainty. This disconnect can lead to disputes or difficulties in agreeing rent renewals, particularly in prime markets where demand and supply dynamics are sensitive.
Practical implications for landlords and letting agents
For landlords, the current environment means careful consideration is needed when setting or reviewing rents. While cost pressures justify increases, landlords must be mindful of tenant expectations and market conditions to avoid prolonged void periods or tenant turnover.
Letting agents play a crucial role in mediating between landlord expectations and tenant affordability. Transparent communication about the reasons for rent reviews, including regulatory impacts, can help manage tenant relations. Agents should also stay informed about evolving legislation and local market trends to advise landlords effectively.
Landlords should review their portfolios to assess the impact of the RRA and other cost factors on rental yields. This might include budgeting for increased compliance costs and considering the potential benefits and drawbacks of selling properties in a changing regulatory landscape.
Uncertainties and what to watch
While the Renters Rights Act has been in force for some time, its full impact on rental markets is still evolving. Future government policy changes, economic conditions, and tenant behaviour will influence rent levels and landlord strategies. Monitoring these factors is essential for landlords and agents to adapt effectively.
There is also uncertainty about how tenant demand will respond if rents rise significantly, especially in prime markets where affordability is a concern. Landlords must weigh the risk of rent increases leading to higher vacancy rates against the need to cover rising costs.
Additionally, ongoing regulatory developments and potential new landlord obligations could further affect operating costs and rental values. Staying updated with official guidance and sector analysis will help landlords prepare for changes.
Key considerations for landlords now
- Review rental values regularly in light of increased costs and regulatory changes.
- Maintain clear communication with tenants about rent reviews and market conditions.
- Ensure compliance with the Renters Rights Act and other legal obligations to avoid penalties.
- Monitor local market trends and tenant demand to balance rent levels and occupancy.
- Consider the financial viability of holding or selling properties under the current regulatory environment.
Supporting landlords with compliance and management
The Landlord Association (TLA) offers members access to practical compliance resources and guidance relevant to the Renters Rights Act and rent setting. TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is designed to help landlords and letting agents organise portfolios, manage rental documentation, and keep records of key actions such as rent reviews and regulatory compliance.
Members can explore TLA’s compliance resources to stay informed about legislative changes and best practices. ORBIT’s developing features aim to assist with producing and retaining documentation related to rent adjustments and tenancy management, supporting landlords in maintaining clear evidence of compliance and decision-making.
Access to TLA’s member support and ORBIT BETA can help landlords manage the complexities of the current rental market and evolving regulatory environment more effectively.
Looking ahead, landlords should continue to track regulatory developments and market signals closely. Being proactive in managing rent reviews and compliance will be vital to sustaining rental income and tenant relationships in a shifting landscape.
Sources: Landlord Today
TLA - The Landlord Association