Rents rise as Renters’ Rights Act reduces London lettings supply

Rents rise as Renters’ Rights Act reduces London lettings supply

Average rents in prime outer London increased 3% in the year to September amid a 6.4% drop in new listings, reflecting supply constraints linked to the Renters’ Rights Act introduced in May 2026.

Rents in prime outer London (POL) have risen sharply in the past year, with Knight Frank reporting a 3% increase to September 2026. This includes a 2.3% rise over the last six months, marking the fastest half-year growth since early 2024. The agency attributes this partly to landlords raising asking rents to offset the increased risks and obligations under the Renters’ Rights Act (RRA), which came into force in May 2026.

Simultaneously, the supply of new rental properties in POL has fallen by 6.4% over the year to August, compared with the previous 12 months. This supply squeeze is pushing rents higher as demand outstrips available properties. The ratio of new prospective tenants to new properties in POL reached 8.9 in the three months to September, a level higher than during the post-pandemic recovery period.

Details of rental market shifts in London

Prime central London (PCL) has experienced a similar, though less severe, supply constraint. Despite a weaker sales market prompting some owners to let their properties, average rents in PCL increased by 1.3% over the year to September, with a 1.8% rise in the last six months—the fastest pace since January 2024. The tenant-to-property ratio in PCL was 5.6, the highest in four years, indicating strong demand relative to supply.

Knight Frank highlights that landlords have been adjusting rents upwards to reflect the heightened risks and responsibilities introduced by the RRA. These include changes to eviction procedures, tenant protections, and possibly increased compliance costs. The agency describes this as an “unintended but predictable consequence” of the new legislation.

The data suggest that the RRA has contributed to a reduction in the number of properties being offered to let, as some landlords may be withdrawing from the market or delaying new listings due to the changed regulatory environment. This contraction in supply, combined with sustained or growing demand, is exerting upward pressure on rents.

Context of the Renters’ Rights Act impact

The Renters’ Rights Act represents a significant reform in the private rented sector, aiming to strengthen tenant protections and improve rental standards. Key provisions include tougher rules on possession notices, enhanced deposit protections, and stricter safety and maintenance obligations. While these measures benefit tenants, they also increase the regulatory burden on landlords.

In practice, the RRA has altered landlord risk calculations. For some, the increased complexity and potential costs of compliance may discourage letting, especially for smaller portfolios or marginally profitable properties. Others may seek to compensate by raising rents to maintain returns.

London’s rental market, particularly in prime areas, is sensitive to such regulatory changes due to its high demand and relatively constrained housing stock. The RRA’s introduction coincides with ongoing affordability challenges and a cautious sales market, factors that together influence landlord and tenant behaviour.

Practical implications for landlords and letting agents

Landlords should anticipate continued pressure on rental pricing in London, especially in prime outer areas where supply is tightening. Reviewing rent-setting strategies is advisable to reflect increased compliance costs and risks under the RRA. However, landlords must balance rent increases with tenant retention considerations and market competitiveness.

Letting agents will need to support landlords in understanding the RRA’s requirements and the market dynamics it influences. Advising clients on appropriate rent levels, tenancy terms, and compliance steps will be critical. Agents should also monitor local supply trends closely to provide timely market insights.

For landlords considering entering or exiting the market, the RRA’s impact on operational complexity and profitability is a key factor. Those with smaller portfolios may find the increased administrative and legal demands challenging, potentially leading to further supply reductions.

Uncertainties and areas to watch

The full long-term effects of the Renters’ Rights Act on the private rented sector remain uncertain. While early data indicate supply contraction and rent rises, other factors such as government interventions, market cycles, and broader economic conditions will also play roles.

There is also uncertainty about how landlords will adapt to the RRA over time. Some may improve compliance and tenant relations, stabilising supply, while others may exit the sector or reduce available properties. Monitoring changes in eviction rates, tenancy durations, and landlord sentiment will be important.

Regulatory developments or amendments to the RRA could emerge if supply constraints and affordability issues intensify. Stakeholders should watch for government consultations or policy responses addressing unintended consequences of the reform.

Considerations for landlords now

Landlords should review their portfolios and tenancy management practices in light of the RRA. Ensuring all documentation, safety checks, and compliance records are up to date will reduce risk. It is prudent to assess rental pricing strategies to reflect market conditions and regulatory costs without pricing out reliable tenants.

Engaging with letting agents knowledgeable about the RRA will help landlords navigate the evolving requirements. Staying informed about local market supply and demand trends will support better decision-making on letting or selling properties.

Landlords should also consider the potential benefits of proactive communication with tenants to foster longer tenancies and reduce void periods amid supply shortages. Understanding tenant needs and expectations under the new legal framework can aid retention.

Supporting landlords through changing regulations

The Landlord Association (TLA) membership offers access to practical compliance resources and guidance tailored to the Renters’ Rights Act and its impact on lettings management. Members can explore TLA’s developing ORBIT platform, currently in BETA testing, which assists landlords and letting agents in organising property records, managing rental documents, and recording key actions such as safety checks and communications.

ORBIT’s integration of TLA compliance resources helps landlords keep track of evolving regulatory requirements and maintain evidence of compliance activity. This can be especially valuable in managing the complexities introduced by the RRA, supporting landlords in meeting their obligations efficiently.

Exploring TLA membership and ORBIT BETA access provides landlords with tools and information to adapt to the changing rental market and regulatory environment. These resources complement professional advice and help maintain organised, compliant portfolios.

Looking ahead, landlords should remain vigilant to further regulatory updates and market shifts, using available support to manage risks and opportunities in the private rented sector.

Sources: Landlord Today