UK landlords can expect a stable property market in 2026, with modest increases in both rental prices and house values. Forecasts indicate that while growth will be subdued, ongoing tenant demand and improving mortgage conditions should support a balanced lettings market, helping landlords plan with greater confidence.

Modest Rental Growth Expected Across London

According to Chestertons, rents in Greater London are projected to rise by approximately 2% in 2026, with the most expensive postcodes seeing increases of around 3%. This moderate growth reflects a market where strong tenant demand continues to be met by sufficient rental stock, preventing excessive inflation in rental prices. The anticipated stability is partly due to many landlords choosing to remain active despite concerns over the Renters’ Rights Act, which had initially raised fears of a mass sell-off.

However, tenant affordability remains a significant constraint. With renters typically spending about 40% of their income on rent, there is limited scope for substantial rent hikes without risking increased arrears or void periods. This affordability pressure is a key factor landlords should consider when setting rents or planning investment strategies.

House Price Increases to Remain Moderate

Chestertons also forecasts a modest 2% rise in house prices across the UK, including Greater London, with prime central London properties expected to see a smaller increase of around 1%. This cautious optimism is supported by lower borrowing costs and clearer tax policies following the Autumn Budget, which may stimulate demand that had slowed in late 2025.

Despite these positive signals, economic headwinds and stretched buyer affordability mean purchasers will remain selective. This environment could influence landlords’ decisions on whether to sell or hold properties. Chestertons notes that if the sales market improves as expected, some landlords might sell rental properties they had previously withheld, potentially reducing rental supply. Combined with ongoing strong tenant demand, this could lead to rents rising again, albeit gradually.

The Renters’ Rights Act will also impact pricing strategies, as it restricts most landlords from accepting offers above asking price. Consequently, asking prices may increase slightly to compensate for this limitation.

Buy-to-Let Lending Set to Grow

The Intermediary Mortgage Lenders Association (IMLA) projects gross mortgage lending will reach £320 billion in 2026 and £350 billion in 2027. Most of this growth will be driven by house purchase loans as interest rates decline and affordability improves.

Buy-to-let lending is forecast to increase from £39 billion in 2025 to £44 billion in 2026, and £48 billion in 2027. This growth is supported by stronger rental yields, which make buy-to-let investments more attractive to specialised landlords. While some less committed landlords may exit the market, more professional operators are expected to fill the gap, maintaining overall market resilience.

Kate Davies, IMLA’s executive director, emphasises the importance of the housing and mortgage markets in supporting the wider UK economy. She highlights that falling interest rates, rising transaction levels, and a recovering buy-to-let sector all point to a more positive lending outlook through 2026 and 2027.

Smaller Landlords and Agencies Face Challenges

Despite these encouraging trends, Tom Goodman, managing director at the Goodlord Group, predicts that smaller landlords may choose to leave the sector in 2026. He cites regulatory pressures, increased compliance burdens, and margin squeezes as key factors driving this exit. Similarly, smaller letting agencies might also consider withdrawing from the market.

Goodman suggests that landlords who remain active will either scale up their operations or specialise in niche markets to sustain profitability. This shift could lead to a more professionalised landlord sector, with implications for how properties are managed and marketed.

Generational Changes and Longer-Term Renting

Goodman also notes a generational shift among landlords, with newer entrants being more digitally native. These landlords expect higher standards of communication, transparency, and data access, which may challenge traditional letting agents who have not modernised their services.

Additionally, longer-term renting is expected to become more common. Despite concerns about periodic tenancies increasing tenant turnover, the reality may be different. Given current supply and demand dynamics, tenants are likely to remain in their homes for extended periods, moving the UK closer to rental models seen in countries like Germany, where tenants often rent for years rather than months.

Implications for UK Landlords

For landlords, these forecasts suggest a year of steady, manageable growth rather than dramatic market shifts. The combination of stable rental increases, moderate house price growth, and improving mortgage conditions provides a foundation for informed investment and management decisions. However, landlords should remain mindful of tenant affordability constraints and regulatory changes such as the Renters’ Rights Act, which will influence rental pricing and property management practices.

Smaller landlords and agencies may need to reassess their positions in the market, considering scaling up or specialising to remain competitive. Embracing digital tools and modern communication methods will be increasingly important to attract and retain tenants and to meet the expectations of a new generation of landlords.

Looking Ahead: TLA’s Trusted Partners Hub

In support of landlords and property professionals navigating these changes, The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026. This platform will feature verified and approved service providers selected to assist landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest to join the hub, offering landlords access to trusted expertise and services.