UK rent rises forecast to accelerate to 4% or 5%

UK rent rises on new tenancies ran at 2.6% in the year to July, and the pace is set to pick up. BBC News reported on 13 September 2026 that annual rent rises on privately rented homes are forecast to reach 4% or 5% by the end of the year. That follows a three-year slowdown that has now gone into reverse, with fewer homes available to rent sitting at the centre of the shift.

What the rent numbers actually show

Rent inflation on new lets had been cooling for three years. According to BBC News (13 September 2026), the rising cost of renting fell to a low of 1.6% in February. By July, average rents on new tenancies were up 2.6% on a year earlier, a figure that still sits below the rate of rising prices in general.

The supply side is where the story turns. 3% fewer homes were available to rent than a year earlier, BBC News reported on 13 September 2026. Each listing now draws an average of more than five enquiries. That is the most intense competition for nearly two years, although it remains a long way short of the queues seen after the pandemic. Our free buy-to-let stress test calculator models the rental coverage test (the affordability check lenders run on buy-to-let loans) against a firmer rent line.

Richard Donnell, executive director at the portal that produced the research, put the pressure point on supply. "Our latest report shows how sensitive the rental market is to even modest changes in how many homes are available for rent," he said.

Why is rental supply tightening?

Two things are at work, and they are not the same thing. Fewer homes are available to rent. And with potential first-time buyers put off by higher mortgage rates, competition for rental places in some areas was more intense (BBC News, 13 September 2026). On the supply side, new investment in rental homes by landlords was described in the research as still muted because of higher costs and more regulation.

Regulation is part of that picture. The Renters' Rights Act came into force in England at the start of May. It was described as the biggest shake-up of the sector in more than 30 years (BBC News, 13 September 2026). That is the commencement the report covers, and investors outside England will want to check what applies locally. For investors weighing whether to add stock or hold what they have, the property investment strategies hub covers how that decision plays out over a cycle.

Nathan Emerson, chief executive at Propertymark, which represents lettings agents, said the report underlined the need for more high-quality rental homes. "Increasing supply must remain a priority if we are to give tenants greater choice, improve affordability and create a more stable rental market," he said.

What a 4% or 5% year does to a portfolio

Rent rises are showing up across the UK, but the ceiling is not the same everywhere. The report said that in less expensive areas renters have more capacity to absorb rent rises before hitting an affordability ceiling. In the most expensive areas, it said, rents are already stretching what renters can pay (BBC News, 13 September 2026). Rental demand was described as particularly significant in London. Rent levels vary postcode by postcode, and our free LHA rates map shows Local Housing Allowance boundaries, the benefit rates that anchor the lower end of many local markets.

One number keeps the forecast in perspective. A rise of 4% or 5% roughly matches the average annual increase in workers' earnings (BBC News, 13 September 2026). This reads as a tightening market rather than a runaway one. From a portfolio perspective, the practical work sits in renewals and in how quickly a unit re-lets. The business and systems hub covers the operational side of running that across several properties.

Key takeaways

• Average rents on new tenancies rose 2.6% in the year to July, while the rising cost of renting had fallen to a low of 1.6% in February (BBC News, 13 September 2026).

• The forecast is for annual rent rises to reach 4% or 5% by the end of the year.

• Supply is the constraint: 3% fewer rental homes were available than a year earlier, with more than five enquiries per listing.

• A 4% or 5% rise roughly matches the average annual rise in workers' earnings. Separately, the report said rents in the most expensive areas are already stretching what renters can pay, capping how much further they can rise.