Landlords raising asking rents amid Renters Rights Act changes

Landlords raising asking rents amid Renters Rights Act changes

Landlords are increasingly setting higher asking rents at the start of tenancies following the introduction of the Renters Rights Act, which restricts in-tenancy rent increases and bans bidding wars.

Recent analysis by the lettings platform Hello Neighbour indicates that landlords are adjusting their pricing strategies in response to the Renters Rights Act’s provisions. The Act, which has made it more difficult to raise rents during a tenancy and outlawed bidding wars where prospective tenants compete by offering higher rents, appears to be encouraging landlords to set higher rents upfront when advertising properties.

This shift reflects a strategic response to the Act’s tighter controls on rent increases after a tenancy begins. According to Hello Neighbour, landlords previously might have accepted a lower initial rent to secure tenants and then increased rent gradually during the tenancy. Now, with in-tenancy rises harder to implement and tenants having clearer avenues to challenge excessive increases, landlords are pricing properties higher at the outset to mitigate the risk of being unable to adjust rents later.

Analysis of Renters Rights Act impact on rent setting

Hello Neighbour’s report highlights a notable pattern: advertised rents have firmed up, yet enquiries per property have declined. This suggests landlords are testing the market with higher asking rents, potentially reducing the pool of interested tenants. The platform notes that while this approach is currently pushing advertised rents higher, it may not be sustainable in the long term. Properties priced above market levels risk remaining vacant, which could ultimately be more costly than accepting a lower rent.

The Renters Rights Act’s challenge mechanism allows tenants to dispute rent increases that exceed market rates, reinforcing a market correction if landlords overprice. The Act’s restrictions on in-tenancy rent rises mean landlords have less flexibility once a tenancy starts, encouraging them to front-load the rent to anticipated market levels.

Phil Shelley, chairman of Hello Neighbour, explains that the rental market is now more normalised after a decade of exceptional demand driven by high net migration and shorter tenancies. With demand stabilising and tenants staying longer, availability rather than tenant numbers is now the primary factor influencing rents. The average tenancy length has increased significantly, reducing the frequency of properties coming back to market and tightening supply.

Context of rental market trends and demand drivers

The report places these rent-setting changes within a broader rental market context. It notes that the surge in rent inflation seen in 2022 and 2023, partly driven by migration and high demand, has subsided. Net migration has fallen from a peak of 944,000 in the year to March 2023 to 171,000 by December 2025, returning to more historic levels.

Despite concerns about landlord sell-offs, the private rented sector in England has grown steadily, reaching a record 5.03 million dwellings by March 2025. However, availability has tightened because tenants are staying longer in their homes, with the average tenancy length rising by 40% over four years. This reduced turnover means fewer homes become available each year, contributing to supply constraints.

New housing supply remains below government targets, with a cumulative shortfall of over 400,000 homes. This supply-demand imbalance, combined with affordability pressures, limits how far rents can rise sustainably. The average private rent accounted for 36.3% of median private-renting household income in England in the year to March 2024, above the 30% affordability threshold used by the Office for National Statistics.

Practical implications for landlords and letting agents

For landlords, the Renters Rights Act requires a reconsideration of rent-setting strategies. The traditional approach of starting with a lower rent and increasing it during a tenancy is now less viable. Instead, landlords may need to price properties closer to market levels from the outset to secure expected returns.

Letting agents should advise landlords on balancing competitive pricing with market realities. Overpricing risks longer void periods, which can erode income and increase costs. Agents will also need to manage tenant expectations and explain the Act’s protections around rent increases, helping to reduce disputes and challenges.

Landlords must remain vigilant about the Act’s challenge mechanism and ensure advertised rents reflect local market conditions. Evidence of comparable rents and clear documentation will be important to defend rent levels if challenged by tenants or regulators.

Uncertainties and areas to monitor

It remains unclear how lasting the current trend of higher advertised rents will be. Hello Neighbour suggests that market forces and the Act’s challenge provisions will likely prevent sustained overpricing. However, the balance between rent levels, demand, and supply could shift if economic conditions or government policies change.

Landlords and agents should watch for further regulatory developments and enforcement practices related to the Renters Rights Act. The effectiveness of the challenge mechanism and tenant awareness will influence how rent-setting strategies evolve. Additionally, changes in migration patterns, housing supply, and affordability will continue to shape rental market dynamics.

What landlords should consider now

• Review current rent-setting practices to ensure they align with the Renters Rights Act’s restrictions on in-tenancy increases.
• Conduct thorough market research to set competitive asking rents that reflect local demand and supply conditions.
• Maintain clear records of rent levels and comparable market evidence to support rent decisions if challenged.
• Communicate transparently with tenants about rent policies and the protections afforded by the Act to reduce disputes.
• Monitor regulatory updates and enforcement trends to adapt compliance strategies promptly.

Supporting landlords through regulatory change

The Landlord Association (TLA) offers members access to tailored compliance resources and practical guidance on adapting to the Renters Rights Act. Through TLA’s BETA testing of ORBIT, a new property management and compliance platform, landlords and letting agents can organise rental documents, record key actions such as rent reviews and communications, and access up-to-date compliance materials. ORBIT’s tools are designed to help members maintain evidence of rent-setting decisions and monitor regulatory developments efficiently.

Exploring TLA membership provides landlords with ongoing support to manage changing tenancy law requirements and maintain compliance. The platform’s integration of compliance resources with property management functions aims to streamline record-keeping and reduce administrative burdens during this period of regulatory adjustment.

Learn more about ORBIT BETA access and review TLA’s landlord membership options to benefit from these resources.

Looking ahead, landlords should prepare for further rental market adjustments as the full effects of the Renters Rights Act and broader housing trends continue to unfold. Staying informed and proactive will be essential to managing portfolios effectively and maintaining sustainable rental income.

Sources: Landlord Today