Landlords face rising costs despite rent increases in 2026
UK private rents increased by 3.7% in the year to July 2026, but landlords report that rising mortgage, maintenance, and compliance costs are eroding any financial benefit from higher rents.
New data from the Office for National Statistics shows that average private rents in the UK reached £1,393 per month by July 2026, marking a 3.7% annual increase. However, landlords are warning that this rise does not translate into improved profitability due to substantial increases in their outgoings.
Same Derzi, a property expert and landlord, highlights that landlords are facing a 28.5% increase in monthly mortgage payments, alongside a near 20% rise in repair and maintenance expenditure, which now exceeds £9.5 billion annually across the UK. These escalating costs are compounded by new regulatory pressures under the Renters’ Rights Act, which includes the abolition of Section 21 eviction notices, mandatory membership fees for a new landlord ombudsman, and anticipated expenses to meet future homes standards.
Rising costs and legislative changes challenge landlords’ finances
The Renters’ Rights Act reforms, which aim to strengthen tenant protections, are reshaping the private rented sector’s operational environment. The abolition of Section 21 means landlords can no longer use no-fault eviction notices, leading to potentially longer and more complex dispute resolutions with tenants. This change increases landlords’ legal and administrative burdens.
Additionally, the introduction of a national Private Rented Sector (PRS) Database, scheduled for late 2026 rollout, will require landlords to register their properties and pay associated fees, though the exact costs remain unconfirmed. The new PRS Landlord Ombudsman scheme will also impose mandatory membership fees, designed to provide a dispute resolution mechanism but adding to landlords’ financial commitments.
Compliance with future homes standards will necessitate significant property upgrades, further increasing expenditure. These standards are part of wider government efforts to improve energy efficiency and safety in rental properties, but the financial impact on landlords, especially those with smaller portfolios, could be considerable.
Context of landlord demonisation and sector challenges
Derzi criticises the growing negative portrayal of landlords in public discourse, arguing that responsible landlords are unfairly painted as exploitative. He warns that such demonisation risks prompting landlords to exit the market, which could reduce rental supply and push rents higher, ultimately harming tenants.
While acknowledging that landlords who act inappropriately should face penalties, Derzi emphasises the importance of distinguishing between bad actors and landlords who are committed to providing fair and well-maintained housing. The sector is navigating a complex period where regulatory changes, cost pressures, and public perceptions intersect, creating uncertainty for landlords and letting agents alike.
Practical implications for landlords and letting agents
Landlords looking to increase rents must carefully follow the legal process to avoid disputes. Derzi advises providing tenants with clear written communication detailing the current rent, the proposed increase, the amount of the increase, and the reasons behind it. Transparency about rising costs, such as mortgage and maintenance expenses, can help maintain good tenant relationships.
Engaging tenants in dialogue, possibly through phone calls or meetings, can demonstrate landlords’ commitment to fairness and encourage tenant understanding. Landlords should also specify the effective date of any rent increase and remain open to questions, as tenants have grounds to challenge rent changes if the process is not properly followed.
Letting agents play a crucial role in guiding landlords through these changes, ensuring compliance with new legislation, and managing tenant communications effectively. They must stay updated on evolving regulations, particularly around the Renters’ Rights Act and the forthcoming PRS Database requirements.
Uncertainties and what landlords should monitor
Several details remain unclear, notably the exact fees associated with the PRS Database and the new landlord ombudsman scheme. Landlords will need to monitor official government announcements to understand their financial obligations fully and prepare accordingly.
The impact of the abolition of Section 21 on possession proceedings is still unfolding, with potential for increased legal costs and longer dispute resolution times. Landlords should be vigilant in documenting all communications and actions related to tenancy management to support any legal processes.
Compliance with future homes standards will require landlords to stay informed about technical requirements and timelines. Early planning and budgeting for necessary property upgrades will be critical to avoid penalties and ensure continued eligibility to let properties.
What landlords should consider now
Landlords should review their current mortgage arrangements and explore options to mitigate rising interest costs, such as remortgaging or fixed-rate deals. They should also audit their maintenance and repair budgets to identify areas where efficiencies can be gained without compromising property standards.
Understanding the full scope of the Renters’ Rights Act reforms is essential. Landlords must familiarise themselves with the abolition of Section 21, the new dispute resolution mechanisms, and the requirements for the PRS Database and ombudsman membership. Keeping detailed records of rent reviews, tenant communications, and compliance actions will be invaluable.
Engaging with professional bodies and compliance resources can help landlords stay ahead of regulatory changes. Letting agents should support landlords by providing up-to-date advice and ensuring all tenancy processes meet legal standards.
Supporting landlords through regulatory changes with TLA
The Landlord Association (TLA) offers members access to comprehensive compliance resources and practical guidance tailored to the evolving rental sector regulations. TLA’s developing property management platform, ORBIT, currently in BETA testing, is designed to assist landlords and letting agents in organising property records, managing rental documents, and maintaining evidence of compliance activities.
ORBIT’s features include tools for recording repairs, inspections, and tenant communications, which are crucial for meeting the documentation standards required under new legislation. Members can also access up-to-date compliance information and support materials to navigate the Renters’ Rights Act reforms and prepare for the PRS Database and ombudsman membership obligations.
Exploring TLA membership provides landlords with practical assistance to manage increasing regulatory demands and helps ensure that their portfolios remain compliant and well-managed amid sector changes.
Looking ahead, landlords must balance rising operational costs with fair rent increases and compliance demands, while monitoring forthcoming government guidance to manage their portfolios effectively.
Sources: Landlord Today
TLA - The Landlord Association