# UK Rental Market 2026: Record Rents and Falling Supply

> Average UK rents reached record highs in early 2026, rising 8.3% year-on-year as landlords exit the market and demand from would-be buyers unable to afford mortgages intensifies. Here's what's driving the crisis and what it means for tenants and landlords.

*Section: News — By Daily Junction Editorial Team (Newsroom) — Published February 15, 2026 — 6 min read*

Canonical URL: https://dailyjunction.org/news/uk-rental-market-2026-crisis
Tags: housing, renting, property, cost of living, landlords, tenants rights

## Key takeaways

- Average UK rent reached £1,285 per month in January 2026, up 8.3% year-on-year, with London rents averaging £2,150
- The number of rental properties available has fallen by 30% since 2021 as landlords sell up due to higher mortgage costs, tax changes, and regulatory pressures
- Demand for rental properties has surged as high mortgage rates price many would-be buyers out of homeownership
- Renters are facing bidding wars, upfront rent demands, and discrimination as landlords become more selective in a tight market
- The Renters' Rights Bill, expected to pass in 2026, will ban Section 21 'no-fault' evictions and introduce new tenant protections, but may accelerate landlord exits

## Context: the perfect storm in the rental market

The UK rental market has been under pressure for years, but 2025-26 has seen the crisis intensify to levels not seen in decades. Average rents are rising at the fastest pace on record, the number of available rental properties has collapsed, and tenants are reporting bidding wars, upfront rent demands of six months or more, and outright discrimination as landlords become increasingly selective. The causes are multiple: landlords are exiting the market due to higher mortgage costs and tax changes, while demand has surged as high mortgage rates price would-be buyers out of homeownership and force them to rent for longer. The result is a market that is deeply dysfunctional, with tenants bearing the brunt of the squeeze. Understanding what is driving the crisis, what rights tenants have, and what is likely to change is essential for anyone renting or considering renting in 2026.

## The data: record rents and collapsing supply

Average UK rent reached **£1,285 per month** in January 2026, according to Rightmove data, up 8.3% year-on-year. This is the highest annual increase since records began and significantly above the rate of general inflation. London rents averaged **£2,150 per month**, up 9.1% year-on-year, while rents in the North West and Scotland rose even faster in percentage terms from a lower base.

The ONS Index of Private Housing Rental Prices, which uses a different methodology and lags by a month, showed annual rental inflation of **7.8%** in December 2025, the highest since the index began in 2016.

| Region | Average rent (Jan 2026) | Year-on-year change |
|---|---|---|
| London | £2,150 | +9.1% |
| South East | £1,420 | +8.5% |
| East of England | £1,290 | +8.2% |
| South West | £1,210 | +7.9% |
| UK average | £1,285 | +8.3% |

The supply side of the market has collapsed. The number of rental properties available to let in January 2026 was **30% lower** than in January 2021, according to Zoopla. In some cities, including Manchester, Bristol, and Edinburgh, the fall has been even steeper, with available stock down 40-50%. At the same time, demand has surged: the number of prospective tenants contacting agents per available property has more than doubled since 2021, creating intense competition for every listing.

## What's changing: why landlords are leaving

The exodus of landlords from the rental market is driven by a combination of economic and regulatory factors. The most immediate is **mortgage costs**. Buy-to-let mortgage rates have risen from 2-3% in 2021 to 5-6% in 2026, following the Bank of England's interest rate rises. For a landlord with a £200,000 mortgage, this means an extra £4,000-6,000 per year in interest payments, which can wipe out rental yields entirely. Many landlords who bought in the low-rate era are now making a loss once mortgage costs are factored in, and are selling up.

The second factor is **tax changes**. Since 2020, landlords can no longer deduct mortgage interest from rental income before calculating tax; instead, they receive a 20% tax credit. For higher-rate taxpayers, this has significantly increased tax bills. A landlord earning £50,000 from other sources and £15,000 in rental income, with £10,000 in mortgage interest, used to pay tax on £5,000 of rental profit. Now they pay tax on the full £15,000 and receive a £2,000 tax credit, resulting in a much higher tax bill.

The third factor is **regulation**. Energy efficiency standards (EPC ratings of at least E, rising to C in future) require costly upgrades for older properties. Licensing schemes in some local authorities impose fees and inspections. And the forthcoming Renters' Rights Bill, which will ban Section 21 no-fault evictions and introduce new tenant protections, is seen by many landlords as tilting the balance too far toward tenants and increasing the risk and hassle of being a landlord.

> "I've been a landlord for 20 years, but between the mortgage costs, the tax changes, and the new regulations, it's just not worth it anymore. I'm selling up and putting the money in a pension. I'm not the only one." — a landlord's explanation that has become a common refrain in 2026.

The result is a vicious cycle: landlords sell to owner-occupiers, reducing the rental stock; demand for rentals rises as high mortgage rates keep people renting for longer; rents rise due to the supply-demand imbalance; and more landlords decide to sell because the hassle is not worth the return, even with higher rents.

## What it means for tenants: navigating a hostile market

For tenants, the 2026 rental market is the most difficult in a generation. Competition for properties is intense, with dozens of applicants for every listing in many areas. Landlords and agents are increasingly demanding:

- **Upfront rent payments** of 3-6 months, which is legal but excludes anyone without significant savings
- **Guarantors** earning 2.5-3 times the annual rent, which is difficult for many tenants to provide
- **Reference checks** that exclude anyone with a poor credit history, previous rent arrears, or gaps in employment
- **No DSS** policies (refusing tenants on benefits), which is technically illegal discrimination but still widespread

Tenants are also reporting **bidding wars**, where agents invite offers above the advertised rent, and **rent increases** of 10-20% at renewal, which are legal if the landlord follows the correct procedure but are financially devastating for tenants on fixed incomes.

Your rights as a tenant are limited but important to know. Your landlord cannot increase your rent during a fixed-term tenancy unless the agreement allows it. If you are on a periodic tenancy, they can increase it by giving you at least one month's notice (for monthly tenancies) using a Section 13 notice, but the increase must be 'fair and realistic' — if you think it is excessive, you can challenge it at a tribunal, though this is rare in practice. Your landlord cannot evict you without following the correct legal process, and if you are being evicted under Section 21, you have at least two months' notice and the right to stay until a court order is obtained if you choose to challenge it.

If you are struggling to find a rental property, consider:

- **Widening your search area** to less competitive locations or areas with better transport links
- **Using a guarantor service** if you cannot provide a family guarantor
- **Offering a longer tenancy** (e.g., 18-24 months) to appeal to landlords seeking stability
- **Being flexible on move-in dates** to fit the landlord's timeline

If you are facing a rent increase you cannot afford, speak to your landlord to negotiate or ask for a smaller increase phased over time. If that fails, you may need to move, which is costly and disruptive but may be cheaper than accepting an unaffordable increase.

## What to watch next

Watch the progress of the Renters' Rights Bill, which is expected to pass in 2026 and will ban Section 21 evictions, introduce new grounds for possession, and strengthen tenant protections. This will be a significant improvement for tenant security, but it may also accelerate landlord exits in the short term, worsening the supply crisis before it improves. Watch rental price data from Rightmove, Zoopla, and the ONS for whether rent growth is slowing or accelerating — if it stays above 8%, affordability will continue to deteriorate and political pressure for rent controls or other interventions will grow. And watch your own tenancy: if you have a good landlord and a fair rent, consider negotiating a longer fixed term to lock in stability, because the alternative of moving in the current market is increasingly unattractive. The rental crisis is not going away soon, and tenants need to be informed, assertive, and strategic to navigate it.

## Frequently asked questions

### Why are so many landlords selling up?

A combination of factors has made buy-to-let less attractive: mortgage interest rates have risen from 2-3% to 5-6%, eroding rental yields; tax relief on mortgage interest was restricted in 2017-20, increasing tax bills for higher-rate taxpayers; and regulatory requirements (such as energy efficiency standards and licensing) have increased costs. Many landlords, particularly accidental or small-scale landlords, have decided it is no longer worth the hassle and have sold to owner-occupiers, reducing the rental stock.

### Can my landlord increase my rent by any amount?

If you are on a fixed-term tenancy, your rent can only be increased if the tenancy agreement allows it or if you agree to the increase. If you are on a periodic (rolling) tenancy, your landlord can increase the rent by giving you at least one month's notice (for monthly tenancies) using a Section 13 notice. There is no legal cap on the increase, but it must be 'fair and realistic' — if you think it is excessive, you can challenge it at a tribunal. In practice, most landlords increase rents in line with or slightly above inflation, but in a tight market some are pushing for much larger increases.

### What is Section 21 and why is it being banned?

Section 21 is the legal mechanism that allows landlords to evict tenants without giving a reason, as long as they give two months' notice and follow the correct procedure. It is often called a 'no-fault' eviction. The Renters' Rights Bill will abolish Section 21, meaning landlords will only be able to evict tenants for specific reasons, such as rent arrears, antisocial behaviour, or the landlord needing to sell or move into the property. This gives tenants more security, but some landlords argue it will make them more risk-averse and less willing to rent to tenants they perceive as higher risk.

## Sources

- [Rightmove — rental price tracker](https://www.rightmove.co.uk/news/rental-price-tracker/)
- [ONS — Index of Private Housing Rental Prices](https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/latest)
- [Zoopla — rental market report](https://www.zoopla.co.uk/discover/property-news/rental-market-report/)
- [GOV.UK — Renters' Rights Bill](https://www.gov.uk/government/collections/renters-reform-bill)

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Daily Junction — https://dailyjunction.org/news/uk-rental-market-2026-crisis