Rent Hikes Surge as Landlords Pre-Empt Renters Rights Act Fallout

Asking rents across the UK's private rented sector are climbing at pace as landlords move to insulate themselves against the financial implications of the incoming Renters Rights Act, according to new industry data. The legislation, which abolishes Section 21 'no-fault' evictions and introduces a raft of new tenant protections, is prompting a wave of pre-emptive repricing that could reshape rental affordability well before the law formally takes effect.

This matters enormously for UK property investors because it signals a structural shift in how landlords price risk. For years, Section 21 gave landlords a straightforward mechanism to regain possession of a property, whether to sell, re-let at market rate, or deal with a problematic tenancy. Its removal means landlords must now build a larger risk premium into rents from the outset, rather than relying on the ability to reset terms quickly. Early estimates suggest average asking rents have risen by around 5-7% year-on-year in several regional markets, outpacing wage growth and squeezing tenant affordability further in an already stretched sector.

The regional picture is far from uniform. In London and Surrey, where rental yields are already compressed by high property values, landlords are pushing through above-average increases to protect thin margins, with some agents reporting asking rent rises of 8% or more on new lettings in the capital's outer boroughs. In contrast, Manchester, Leeds and Birmingham — cities that have attracted institutional build-to-rent investment in recent years — are seeing more moderate increases, typically in the 4-5% range, partly because professionally managed portfolios can absorb compliance costs more efficiently than small-scale landlords. Liverpool and Newcastle, meanwhile, remain relative value markets, though local agents report growing numbers of smaller landlords exiting the sector entirely rather than adapting to the new rules, which is tightening supply and pushing rents upward regardless of institutional buffering.

The exodus of smaller landlords is arguably the more consequential trend for the next 6-12 months. Mortgage-financed buy-to-let landlords with one or two properties, already contending with higher borrowing costs after several years of elevated interest rates, are increasingly weighing whether the administrative burden and reduced flexibility under the new regime justify remaining in the market. Surveys from lettings bodies suggest as many as one in six landlords are considering selling within the next year. Where this plays out at scale in cities with fragmented ownership — parts of Liverpool, Newcastle and outer London — reduced stock could push rents higher still, even as overall transaction volumes in the sales market pick up the slack.

For first-time buyers, this dynamic cuts two ways. Landlord disposals could release additional stock into the sales market, particularly at the lower end of the price spectrum where amateur landlords tend to concentrate, potentially easing competition for entry-level homes in cities such as Birmingham and Leeds. However, rising rents in the interim make it harder for renters to save deposits, delaying the transition from tenancy to ownership for many. Commercial and institutional investors, by contrast, are likely to view the changing landscape favourably: build-to-rent operators with scale, in-house compliance teams and diversified portfolios are better positioned to absorb regulatory costs and could accelerate acquisitions of smaller landlords' stock at a discount, further consolidating professional ownership in the sector.

Developers focused on purpose-built rental accommodation stand to benefit disproportionately from this realignment. As amateur landlords retreat, institutional capital is likely to fill the gap, particularly in regional cities where build-to-rent penetration remains below London levels but demand fundamentals are strong. Expect increased development activity in Manchester and Birmingham over the next year as investors seek to capture rental growth while sidestepping the compliance exposure faced by smaller-scale owners. The direction of travel is clear: the Renters Rights Act is accelerating the professionalisation of the private rented sector, and rents will continue rising faster than incomes until supply from institutional players catches up with demand vacated by exiting landlords.