The cost of renting a home across the UK has picked up speed following a three-year period of slower growth, with property experts warning tenants face steeper increases ahead.
New tenancy rental costs climbed 2.6% in July compared with the same month a year earlier, according to property website Zoopla. Although this remains below the broader rate of inflation, the portal forecasts annual rent rises in the privately rented sector will reach 4% to 5% by year-end. A separate September 2026 rental index confirmed this trend, recording a median asking rent of £1,050 per month across 218 cities and annual rent growth of 4.1% to July 2026.
The acceleration stems from a tightening rental supply. Fewer homes are available to let, and potential first-time buyers deterred by elevated mortgage rates are competing more fiercely for rental accommodation in certain regions. The number of available rental properties has fallen 3% compared with a year ago, while each listing now attracts an average of more than five enquiries—the highest level of competition in nearly two years, though still below the intense demand seen immediately after the pandemic.
Richard Donnell, executive director at Zoopla, said the market's sensitivity to supply changes was evident.
Growing the number of homes for rent through increased investment is the most sustainable route to boosting choice for renters and ensuring stability in rent levels over the long run.
How does the new Renters' Rights Act affect rent increases?
The Renters' Rights Act came into force in England on 1 May 2026, introducing the most significant overhaul of the rental sector in more than three decades. Under the new framework, landlords can raise rent only once per year and must provide at least two months' notice using a Section 13 notice. The Act also ended Section 21 no-fault evictions and abolished fixed-term assured tenancies in the private rented sector, fundamentally reshaping the relationship between landlords and tenants.
However, the regulatory changes have contributed to a slowdown in new rental investment. Landlords cite higher costs and increased compliance burdens as reasons for holding back on property purchases. Nathan Emerson, chief executive at Propertymark, which represents lettings agents, emphasised the need for policy support.
A sustainable private rented sector requires the right conditions for responsible landlords to invest for the long term. Increasing supply must remain a priority if we are to give tenants greater choice, improve affordability and create a more stable rental market.
Where are rent rises most severe?
Rent increases are occurring across the UK, but their impact varies significantly by location. In less expensive areas, renters retain greater financial capacity to absorb rises before reaching an affordability ceiling. Conversely, in the most expensive regions, rents already consume much of what tenants can afford, limiting how much further increases can climb. London experienced particularly strong rental demand, while other areas face different pressures depending on local market conditions.
What government action is planned next?
The government has announced additional protections for tenants beyond the May 2026 reforms. A nationwide landlord registration service will launch on 15 December 2026, beginning in the West Midlands, with landlords in each English region called up progressively over 12 months. All actively letting landlords must complete registration by 14 November 2027.
The government has also introduced a new mechanism for tenants to challenge rent increases. Housing minister Matthew Pennycook confirmed that initial rent-determination work will transfer to HMRC's Valuation Office, designed to expedite dispute resolution and reduce the burden on tribunals. This represents a further shift in the balance of power between landlords and tenants, though implementation details continue to unfold.
How do forecasts compare with actual wage growth?
Zoopla's earlier forecasts for rent growth have shifted as market conditions evolved. The portal's December 2025 report predicted 2.5% annual rent rises in 2026, but its March and June 2026 reports revised expectations downward to 2% to 3% growth. The current forecast of 4% to 5% by year-end represents a significant upward revision. Notably, this anticipated rent growth roughly aligns with average annual earnings increases for UK workers, meaning many tenants may see their wages keep pace with housing costs—though those in high-cost areas will continue to struggle with affordability.
The rental market slowdown that began in early 2025 has reversed. Rent growth fell to a low of 1.6% in February 2026 before accelerating through the spring and summer months. The combination of constrained supply, regulatory uncertainty during the Renters' Rights Act transition, and continued strong demand has created conditions for faster increases ahead.
Key Facts
- Average rental costs for new tenancies rose 2.6% in July 2026 year-on-year, with forecasts predicting 4% to 5% growth by year-end
- Available rental properties have fallen 3% compared with a year ago, while competition per listing has reached its highest level in nearly two years
- The Renters' Rights Act, which came into force on 1 May 2026, restricts rent increases to once per year with two months' notice, but has discouraged new landlord investment
- A government landlord registration service launches on 15 December 2026 in the West Midlands, expanding nationally over 12 months
- Rent growth of 4% to 5% roughly matches average UK wage growth, but affordability remains critical in high-cost areas where rents already stretch tenant budgets
