Lettings Market Update: August 2026

Rents are still rising, available stock remains well below where it was a decade ago, and the biggest legislative overhaul of the private rented sector in a generation has now taken effect. If you are a landlord, a tenant, or simply trying to understand where the market stands heading into the second half of 2026, here is what the latest figures show.

Rents: Still Moving Upward, but the Pace Is Uneven

The average rent on a new tenancy in the UK reached £1,369 per month in July 2026, up 1.2% from June and 3.4% higher than a year earlier, according to the most recent available figures. Excluding London, the UK average sits at £1,170 per month, rising at a similar monthly pace (Zoopla, July 2026).

London tells a slightly different story. The average new tenancy asking rent in the capital is £2,161 per month, with existing-stock rents averaging £2,290. Annual rent inflation in London is running at 2.0%, considerably below the national figure, which points to a market that has absorbed much of its post-pandemic surge and is now settling toward a more measured pace of growth. The average property is letting in around 20 days, a further sign that the acute imbalance of recent years is easing, if not yet resolved.

For South West London specifically, that 20-day average is a useful benchmark. Well-priced flats and smaller houses in sought-after postcodes are still moving quickly, while overpriced or poorly presented properties are sitting longer than landlords may be used to.

Across England more broadly, the average rental cost in June 2026 was £1,309, representing a 6.5% annual increase (HomeLet, June 2026). That figure is more than double the 3.0% Consumer Price Inflation recorded by the ONS in May, and it significantly outpaces wage growth of 3.4% over the same period. For tenants, affordability is the defining pressure of this market.

Supply: Higher Than a Year Ago, but Still Historically Thin

The number of rental properties available nationally is approximately 9% higher than it was twelve months ago, which sounds encouraging until you set it against the longer view: stock levels remain around 33% below where they were a decade ago. The structural deficit that has driven rents upward for several years has not been resolved; it has merely stopped worsening quite as fast.

RICS’s latest Residential Market Survey recorded a seventh consecutive quarter of net negative landlord instructions, meaning more landlords are leaving the sector than entering it, even as tenant enquiries remain firmly positive across England, Scotland and Wales (RICS, 2026). The English Private Landlord Survey placed the number of properties available to let at approximately 284,000 in March 2026, an 18% fall year-on-year and an all-time low.

The pattern is consistent: the smaller, private landlord with one or two properties is gradually exiting the market, driven by higher borrowing costs, tighter regulation, and a more demanding compliance environment. What remains is an increasingly professionalised sector. For tenants, this means dealing with landlords and agents who are, on balance, better organised. It also means less choice and, in many areas, continued upward pressure on rents.

The Renters’ Rights Act: What Has Changed

From 1 May 2026, the Renters’ Rights Act came into force, ending fixed-term tenancies and abolishing Section 21 no-fault evictions in England. The reforms affect an estimated 11 million renters and 2.3 million landlords. Key provisions include:

• New limits on how and when landlords can increase rents mid-tenancy
• A ban on bidding wars, with landlords and agents prohibited from accepting offers above the advertised asking rent
• A prohibition on refusing tenants who receive housing benefit
• The right for all tenants to request permission to keep a pet
• A requirement that landlords demonstrate at least three months of arrears before applying for possession on that ground

The ban on above-asking offers has had a notable knock-on effect: some landlords and agents are setting initial asking rents higher than they might previously have done, knowing they cannot accept competitive bids above the listed price. This is worth bearing in mind when assessing whether an advertised rent reflects genuine market value.

Void periods, which initially crept up following the Act’s introduction, have since fallen back to an average of around 21 days across England, down from 24 days in May 2026. The early signs suggest that landlords are adapting to the new framework more quickly than some had anticipated (research reported 12 August 2026).

London Enforcement

The Mayor of London has allocated £400,000 to enforce the Act’s protections for the capital’s renters. With approximately 2.7 million Londoners in the private rented sector, the fund will support up to two advice and advocacy organisations over three years, alongside training for borough enforcement officers. Landlords operating in London should expect scrutiny of compliance to intensify over the coming months.

Mortgage Rates and the Buy-to-Let Squeeze

Buy-to-let mortgage rates moved sharply upward in the spring. The average two-year fixed buy-to-let rate rose from 4.66% to 5.44% between March and April 2026, while the average five-year fixed rate increased from 5.05% to 5.75% over the same period. These increases have tightened the arithmetic for landlords refinancing or acquiring new properties, and are a significant factor behind the continued contraction in available rental stock.

Rates have shown some signs of easing into August, though conditions remain considerably tighter than landlords were accustomed to before 2022. For those with properties in South West London, where rents are higher and yields can be thinner, the pressure on margins is a live concern.

What Current Conditions Suggest for the Months Ahead

The structural picture points toward rents remaining elevated through the rest of 2026. Supply is unlikely to recover meaningfully in the short term, and the Renters’ Rights Act, while not the primary driver of landlord exits, adds to the cost and complexity of operating in the sector. Hello Neighbour’s research suggests rental growth is likely to continue for the remainder of the year, with demand expected to stabilise as net migration slows.

For tenants, affordability constraints are likely to keep the market price-sensitive. For landlords, the emphasis on compliance and professional management has never been more important: a correctly priced, well-maintained property with a responsive landlord or agent is letting quickly, while those that fall short on any of those counts are sitting.

Whether you are a landlord reviewing your portfolio in light of the new legislation, or a tenant navigating a market that is still finding its new equilibrium, Avrasons is well placed to help. For a conversation about how current conditions affect your property or your search, contact our team directly.

ONS house price data | HM Land Registry

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