RICS Signals Further Rent Rises as Tenant Demand Outpaces Supply

The Royal Institution of Chartered Surveyors (RICS) has signalled that rents are tipped to rise further as tenant demand continues to build across the UK, according to Property118. For a market that has already endured several years of punishing rent inflation, this is not a neutral data point. It is a signal that the structural imbalance between the number of households seeking a home to rent and the number of properties available to them has not been resolved, and may be intensifying again.

This matters enormously for UK property investors because the rental market has become the clearest barometer of the housing system's dysfunction. When a professional body such as RICS points to rising tenant demand as the driver of future rent growth, it is effectively confirming that the supply side of the market continues to lag behind need. For landlords who have weathered tax changes, tighter regulation and higher borrowing costs over recent years, renewed upward pressure on rents offers some reassurance that yields can be defended even as the cost of holding property has increased.

The implications differ sharply depending on where an investor or tenant sits in the market. In London and Surrey, where rental demand has long outstripped supply, further rent rises tipped by RICS will deepen affordability pressures that are already pushing some tenants further out from city centres. In regional cities such as Manchester, Birmingham, Leeds, Liverpool and Newcastle, where rental markets have been buoyed by strong employment growth and inward migration from students and young professionals, the RICS outlook suggests landlords in these cities may see continued rental growth rather than any near-term softening. That is a meaningful consideration for buy-to-let investors weighing where to deploy capital over the next year.

For buy-to-let landlords, the RICS signal reinforces a narrative that has persisted since the pandemic: that despite waves of landlords exiting the sector amid higher mortgage costs and stricter regulatory requirements, those who remain are operating in a market where pricing power sits firmly with them. Rising tenant demand against a backdrop of constrained supply typically translates into stronger rental yields, which may encourage some investors who had been sitting on the sidelines to reconsider the sector, particularly in cities with strong employment fundamentals.

First-time buyers and renters, by contrast, face a more difficult 6 to 12 months if the RICS outlook materialises as described. Rising rents make it harder for aspiring homeowners to save for a deposit while simultaneously committing a larger share of income to housing costs, a vicious cycle that has characterised the UK rental market for much of the past decade. Commercial investors and developers focused on the private rented sector, including build-to-rent schemes, should take the RICS signal as validation of continued institutional appetite for purpose-built rental stock in cities where tenant demand is strongest.

Looking ahead, PropertyNews analysis suggests that the direction of travel implied by the RICS outlook is unlikely to reverse quickly. Rental supply additions, whether through new-build completions or landlords re-entering the market, typically take years rather than months to filter through, meaning any RICS-flagged demand pressure in the near term will likely persist into next year. Investors should treat this as a signal to focus acquisition strategies on cities where demand fundamentals, such as employment and population growth, are most robust, rather than assuming rent rises will be uniform across the country. The RICS outlook is ultimately a reminder that the UK's rental market remains defined by scarcity, and that scarcity, not sentiment, is what will continue to set the price of a home to rent.