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Recent official data reveals a significant slowdown in the rise of private rental prices across the UK, with the rate of increase halving over the past year. This development has prompted calls from industry representatives for the government to reconsider the planned tax increase on rental income scheduled for 2027, highlighting the potential impact on landlords and tenants alike.

Slower Growth in Private Rents

According to the Office for National Statistics (ONS), average monthly rents in the private sector across the UK rose by 3.3% in the 12 months leading up to May 2026. This marks a notable decline from the 7% increase recorded in the previous year to May 2025. The timing coincides with the introduction of key provisions of the Renters’ Rights Act, which came into force in May 2026, potentially influencing market dynamics.

The moderation in rent growth suggests a rental market that is experiencing less upward pressure on prices, which may reflect a combination of factors including changes in supply and demand, economic conditions, and regulatory impacts. However, the overall picture remains complex, with regional variations and ongoing challenges in meeting housing needs.

Changing Demand and Supply Dynamics

Analysis from the lettings platform Zoopla indicates that the gap between rental demand and available supply is narrowing nationally. The average number of enquiries per rental property has decreased to just under six, down from a peak exceeding 15 in 2022. This trend points to a softening in tenant demand relative to the availability of rental homes.

Despite this easing, Zoopla warns that demand still outstrips supply in many areas, and investment in new private rented housing remains subdued. This persistent imbalance underscores the ongoing need for increased housing stock to meet tenant requirements and support a balanced rental market.

Regional Variations in Rent Increases

The ONS data also reveals significant regional differences in rent inflation. London has seen the slowest growth, with rents rising by approximately 2%, while the North East of England experienced the highest increase at 5.9%. The National Residential Landlords Association (NRLA) notes that rental demand remains particularly strong in the North East, reflecting local market pressures.

These disparities highlight the importance of considering local market conditions when assessing rental trends and formulating policy responses. Areas with higher demand and limited supply may continue to face affordability challenges despite the national slowdown in rent growth.

Impact on Tenants and Landlords

Research from Hamptons suggests that the proportion of tenants experiencing rent increases in May 2026 fell by 23% compared to the same period in the previous year. This reduction aligns with the broader trend of moderated rent inflation and may offer some relief to tenants facing cost pressures.

However, landlords continue to operate in a challenging environment marked by regulatory changes, market fluctuations, and financial pressures. The NRLA’s Chief Policy Officer, Chris Norris, emphasises that while the private rental sector has shown resilience, there remains a pressing need for more rental properties to address ongoing demand.

Calls to Reconsider the 2027 Tax Increase

In light of these market developments, industry voices are urging the government to scrap the planned tax rise on rental income set for 2027. The NRLA argues that this tax increase could ultimately be passed on to tenants, exacerbating affordability issues and potentially discouraging investment in the private rented sector.

Policy adjustments that support the growth and sustainability of the rental market are seen as essential to ensuring adequate housing supply and protecting both landlords and tenants. The call to halt the tax hike reflects concerns about the potential negative consequences for the sector’s stability and growth prospects.

What this means for landlords

Landlords should be aware that the slowing pace of rent increases may affect rental income growth, particularly in regions where demand is softening. It is advisable to monitor local market conditions closely and consider the implications for rent-setting and tenancy renewals.

Given the ongoing discussions around the 2027 tax rise, landlords may need to evaluate their financial planning and tax strategies in anticipation of potential policy changes. Staying informed about government announcements and engaging with industry bodies can help landlords prepare for evolving regulatory and fiscal environments.

What TLA members should consider

• Review current rental agreements and assess whether rent levels remain competitive and compliant with local market conditions.
• Keep abreast of updates regarding the Renters’ Rights Act and ensure tenancy management practices align with new legal requirements; see our RRA compliance resources.
• Plan for potential changes in tax policy by consulting with financial advisors or tax professionals to understand the impact on rental income.
• Consider strategies to maintain or improve property appeal and tenant retention, especially in regions experiencing slower demand.
• Engage with landlord associations and industry groups to contribute to consultations and stay informed on sector developments.
• Utilise TLA member resources such as the TLA Academy for training on compliance, tenancy management, and financial planning.

TLA Training Academy

The Landlord Association provides structured guidance, compliance education and practical support for landlords, letting agents and property professionals. Members can access training and resources designed to help them stay organised, informed and prepared.

Landlords can explore the Academy here: https://landlordassociation.org.uk/tla-academy/

Those looking to join and access member support can register here: https://landlordassociation.org.uk/get-started-with-the-landlord-association/

TLA update

The Landlord Association is continuing to expand its support, resources and partner network for landlords, tenants, agents and property professionals across the UK. Service providers interested in working with TLA can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/