Rental Supply Continues to Decline Despite Stable Tenant Demand

The Royal Institution of Chartered Surveyors (RICS) has issued a warning that the supply of rental properties in the UK is still falling, according to its latest Residential Market Survey covering the three months to February 2026. While tenant demand remains broadly stable, the number of new landlord instructions is continuing to decline, exacerbating the shortage of available rental homes.

This trend is significant for landlords and letting agents, as it indicates ongoing challenges in replenishing the private rented sector’s stock, potentially leading to increased competition for tenants and pressure on rental prices.

Geopolitical and Economic Factors Impact Market Confidence

Tarrant Parsons, RICS head of market research, highlighted that renewed market volatility is affecting confidence. “The deterioration in the geopolitical backdrop has clearly weighed on confidence,” he said, pointing to recent rises in oil and energy prices as factors likely to keep mortgage rates elevated for longer.

Such economic uncertainty is dampening near-term expectations for the housing market, with survey respondents noting that geopolitical tensions, including the conflict in the Middle East, have contributed to a mood of hesitation among buyers and sellers.

Mortgage Rates Expected to Remain High

Rising energy costs have increased the probability that mortgage interest rates will stay high, which could further restrict borrowing capacity for landlords and homebuyers alike. Parsons noted that these conditions have softened short-term market expectations, which may delay decisions to buy or let property.

For landlords, this environment suggests a need to carefully consider financing costs and rental pricing strategies as borrowing remains expensive.

House Prices Show Mixed Regional Trends

RICS surveyors reported a small overall increase in house prices, although values in London have declined. Regions such as Northern Ireland, Scotland, and the North West of England are experiencing firmer price trends. Despite this, new buyer enquiries weakened and agreed sales have fallen, reflecting a cautious market.

Looking ahead, survey members expect house prices to rise over the coming year, but at a slower pace than previously forecast. This moderated growth outlook may influence landlords’ decisions on portfolio expansion or disposals.

Industry Experts Reflect on Market Conditions

Tom Bill, head of UK residential research at Knight Frank, commented on the impact of recent geopolitical events: “Demand had been recovering after the uncertainty caused by November’s Budget, but the Middle East conflict will dampen sentiment during a traditionally busy period for housing transactions.”

He added that rising mortgage rates due to energy price spikes will reduce spending power, though a weak labour market could still support calls for multiple interest rate cuts later in the year.

Tim Green of Green & Co observed early signs of increased market activity, particularly from first-time buyers, but noted that confidence has weakened since the onset of the Iran conflict. “Spring has not quite arrived yet,” he said, reflecting ongoing uncertainty.

What This Means for UK Landlords

For landlords and letting agents, the continuing fall in rental supply alongside stable tenant demand suggests a tightening market where quality rental properties may attract more interest. However, higher mortgage rates and geopolitical uncertainty could temper investment activity and affect rental affordability.

Landlords should monitor regional price trends and market sentiment closely, as these factors will influence rental yields and portfolio management decisions throughout 2026.

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• rental property supply UK
• tenant demand
• mortgage rates
• house prices UK
• private rented sector
• landlord instructions
• housing market trends
• geopolitical impact on property
• UK residential market survey
• property investment strategies

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/