THE PROPERTY FILTER TAKE
Rental stock in every UK region sits 20-30% below pre-pandemic levels, with landlord instructions running at a net balance of -18% as of June 2026 (RICS).
For landlords, tightening supply is supporting rents in many areas - but tenant affordability is already at or near the ceiling in others, where rent increases risk longer void periods rather than higher returns.
Consider stress-testing your yield against a one-month void scenario before pushing for a rent increase - the BTL stress test calculator models rental income and mortgage cost scenarios side by side.
Rental homes are leaving the market at a rate not seen in years. Every UK region now has between 20% and 30% fewer homes available to rent than before the pandemic, according to Property Industry Eye (June 2026). Landlords are selling up. The stock they release is not coming back.
How Serious Is the Supply Shortfall?
The figures from RICS (Royal Institution of Chartered Surveyors) are striking. Their June 2026 UK lettings market survey recorded landlord instructions - the net flow of new properties coming onto the rental market - at a net balance of -18%, meaning significantly more landlords are withdrawing stock than adding it. Tenant demand stood at +18%, its strongest reading since May 2025.
That supply-demand gap is showing up in void periods (the time a property sits empty between tenancies). Competition for available rentals has fallen sharply from the extremes of 2022. According to lettings market data cited by Property Industry Eye (June 2026), there are now around 5 to 6 enquiries per available rental listing, compared with a peak of close to 15 in 2022. That figure is still well above the pre-pandemic average, and most landlords are filling voids quickly. But conditions can shift faster than assumptions - so it is worth keeping your void risk model current. The BTL stress test calculator is a practical way to pressure-test your numbers.
On rents, growth is happening in most markets but it is far from uniform. According to RICS (June 2026), projected rent growth over the next 12 months stands at around 2.5% nationally, with northern markets outperforming the south. Some towns are seeing high single-digit annual growth. Others are flat or negative, where tenant affordability has already reached its limit.
Why Landlords Are Walking Away
This is not a sudden exit. It has been building for years, driven by three layers of cost pressure.
Section 24 is the first. It restricts mortgage interest tax relief, meaning buy-to-let landlords can no longer deduct their full mortgage interest costs from rental income before calculating their tax bill. For higher-rate taxpayers carrying large loans, this has materially reduced net returns.
The second is stamp duty. Surcharges on additional residential properties have raised the barrier to entering or expanding the sector, deterring new investment at the point of purchase.
Third is the Renters' Rights Act. It came into force on 1 May 2026 and represents the most significant overhaul of the private rented sector in England in over 30 years. Section 21 no-fault eviction notices have been permanently abolished. All existing assured shorthold tenancies (ASTs - fixed-term private rental agreements) became periodic tenancies (rolling month-to-month contracts) from that date, and no new fixed-term ASTs can be granted. Civil penalties for non-compliance now range from £7,000 for minor breaches to £40,000 for serious ones, according to government guidance.
The sales data confirms the direction of travel. According to Realyse (2026), around 15% of homes currently listed for sale across the UK were previously rental properties, up from approximately 10% a year ago. In London, the pressure is sharper. According to Elliot Leigh (June 2026), one in five (20.3%) London homes listed for sale in June had previously been rented within the last five years.
That stock is not cycling back into the private rented sector. According to Realyse (2026), only 6% of rental properties sold in Q2-Q3 2025 had returned to the lettings market by the end of Q1 2026. According to Homefinders (July 2026), around 700 landlords a day are currently selling up across the UK.
What Your Tenants Are Experiencing
Here is where many landlords miss the full picture.
Your tenants are competing in a market with fewer options. According to RICS (June 2026), tenant demand is at its highest since May 2025. But rising demand does not mean tenants have unlimited capacity to pay. In many areas, rents have outpaced wages for several years running. Affordability is stretched. That has a direct consequence for your decisions.
Where supply is critically tight, rents are rising and tenants have limited leverage. Where some new stock has entered the market or affordability has hit its ceiling, rents are flat or falling. Push a rent increase beyond what the local market can absorb, and you sit with an empty property. A one-month void at the old rent often delivers a better annual return than a higher rent paired with a two-month void. The maths is worth running before you set the number.
For landlords running HMOs (Houses in Multiple Occupation - properties let to three or more people from different households, sharing facilities such as kitchens or bathrooms), demand per room is holding up well in university towns and employment hubs. If you are reviewing your HMO setup or considering the strategy, the HMO valuation calculator gives a useful reference point on value and yield.
Thinking about what your tenant's alternatives look like - locally, right now - is practical lettings management. It shapes retention decisions as much as rent review policy does.
Regional Picture and What Comes Next
The national headline masks very different conditions by location. According to RICS (June 2026), members in the north of England are more optimistic about the private rented sector's trajectory than those in the south. Growth is strongest in northern England and parts of Scotland. In the Midlands and along the South Coast, growth has stalled or reversed as affordability limits bite.
The structural shortage will not resolve quickly. A decade of underinvestment in new private rented sector supply, combined with an accelerating landlord exit, has created a gap that new builds cannot close on a short timetable. The Renters' Rights Act removes flexibility that smaller landlords depended on. That is likely to push further exits, particularly in high-cost areas where yields (annual rental income expressed as a percentage of the property's value) were already compressed before the regulatory changes came in.
For landlords thinking about where to hold or invest next, the property investment strategies hub covers approaches suited to different market conditions. For further landlord guides and tools, Property Filter's free resources page is a useful starting point.
Key takeaways
Every UK region has 20-30% fewer homes available to rent than before the pandemic, according to Property Industry Eye (June 2026).
RICS (June 2026) recorded landlord instructions at a net balance of -18%, against tenant demand of +18% - the strongest demand reading since May 2025.
Around 700 landlords a day are currently selling up across the UK, according to Homefinders (July 2026).
15% of homes listed for sale were previously rental properties (up from 10% a year ago), with only 6% of sold rental stock returning to the lettings sector, according to Realyse (2026).
The Renters' Rights Act (in force from 1 May 2026) has permanently abolished Section 21, converted all ASTs to periodic tenancies, and introduced civil penalties of £7,000 to £40,000 for non-compliance.
Rental homes are leaving the market at a rate not seen in years. Every UK region now has between 20% and 30% fewer homes available to rent than before the pandemic, according to Property Industry Eye (June 2026). Landlords are selling up. The stock they release is not coming back.
How Serious Is the Supply Shortfall?
The figures from RICS (Royal Institution of Chartered Surveyors) are striking. Their June 2026 UK lettings market survey recorded landlord instructions - the net flow of new properties coming onto the rental market - at a net balance of -18%, meaning significantly more landlords are withdrawing stock than adding it. Tenant demand stood at +18%, its strongest reading since May 2025.
That supply-demand gap is showing up in void periods (the time a property sits empty between tenancies). Competition for available rentals has fallen sharply from the extremes of 2022. According to lettings market data cited by Property Industry Eye (June 2026), there are now around 5 to 6 enquiries per available rental listing, compared with a peak of close to 15 in 2022. That figure is still well above the pre-pandemic average, and most landlords are filling voids quickly. But conditions can shift faster than assumptions - so it is worth keeping your void risk model current. The BTL stress test calculator is a practical way to pressure-test your numbers.
On rents, growth is happening in most markets but it is far from uniform. According to RICS (June 2026), projected rent growth over the next 12 months stands at around 2.5% nationally, with northern markets outperforming the south. Some towns are seeing high single-digit annual growth. Others are flat or negative, where tenant affordability has already reached its limit.
Why Landlords Are Walking Away
This is not a sudden exit. It has been building for years, driven by three layers of cost pressure.
Section 24 is the first. It restricts mortgage interest tax relief, meaning buy-to-let landlords can no longer deduct their full mortgage interest costs from rental income before calculating their tax bill. For higher-rate taxpayers carrying large loans, this has materially reduced net returns.
The second is stamp duty. Surcharges on additional residential properties have raised the barrier to entering or expanding the sector, deterring new investment at the point of purchase.
Third is the Renters' Rights Act. It came into force on 1 May 2026 and represents the most significant overhaul of the private rented sector in England in over 30 years. Section 21 no-fault eviction notices have been permanently abolished. All existing assured shorthold tenancies (ASTs - fixed-term private rental agreements) became periodic tenancies (rolling month-to-month contracts) from that date, and no new fixed-term ASTs can be granted. Civil penalties for non-compliance now range from £7,000 for minor breaches to £40,000 for serious ones, according to government guidance.
The sales data confirms the direction of travel. According to Realyse (2026), around 15% of homes currently listed for sale across the UK were previously rental properties, up from approximately 10% a year ago. In London, the pressure is sharper. According to Elliot Leigh (June 2026), one in five (20.3%) London homes listed for sale in June had previously been rented within the last five years.
That stock is not cycling back into the private rented sector. According to Realyse (2026), only 6% of rental properties sold in Q2-Q3 2025 had returned to the lettings market by the end of Q1 2026. According to Homefinders (July 2026), around 700 landlords a day are currently selling up across the UK.
What Your Tenants Are Experiencing
Here is where many landlords miss the full picture.
Your tenants are competing in a market with fewer options. According to RICS (June 2026), tenant demand is at its highest since May 2025. But rising demand does not mean tenants have unlimited capacity to pay. In many areas, rents have outpaced wages for several years running. Affordability is stretched. That has a direct consequence for your decisions.
Where supply is critically tight, rents are rising and tenants have limited leverage. Where some new stock has entered the market or affordability has hit its ceiling, rents are flat or falling. Push a rent increase beyond what the local market can absorb, and you sit with an empty property. A one-month void at the old rent often delivers a better annual return than a higher rent paired with a two-month void. The maths is worth running before you set the number.
For landlords running HMOs (Houses in Multiple Occupation - properties let to three or more people from different households, sharing facilities such as kitchens or bathrooms), demand per room is holding up well in university towns and employment hubs. If you are reviewing your HMO setup or considering the strategy, the HMO valuation calculator gives a useful reference point on value and yield.
Thinking about what your tenant's alternatives look like - locally, right now - is practical lettings management. It shapes retention decisions as much as rent review policy does.
Regional Picture and What Comes Next
The national headline masks very different conditions by location. According to RICS (June 2026), members in the north of England are more optimistic about the private rented sector's trajectory than those in the south. Growth is strongest in northern England and parts of Scotland. In the Midlands and along the South Coast, growth has stalled or reversed as affordability limits bite.
The structural shortage will not resolve quickly. A decade of underinvestment in new private rented sector supply, combined with an accelerating landlord exit, has created a gap that new builds cannot close on a short timetable. The Renters' Rights Act removes flexibility that smaller landlords depended on. That is likely to push further exits, particularly in high-cost areas where yields (annual rental income expressed as a percentage of the property's value) were already compressed before the regulatory changes came in.
For landlords thinking about where to hold or invest next, the property investment strategies hub covers approaches suited to different market conditions. For further landlord guides and tools, Property Filter's free resources page is a useful starting point.
Key takeaways
Every UK region has 20-30% fewer homes available to rent than before the pandemic, according to Property Industry Eye (June 2026).
RICS (June 2026) recorded landlord instructions at a net balance of -18%, against tenant demand of +18% - the strongest demand reading since May 2025.
Around 700 landlords a day are currently selling up across the UK, according to Homefinders (July 2026).
15% of homes listed for sale were previously rental properties (up from 10% a year ago), with only 6% of sold rental stock returning to the lettings sector, according to Realyse (2026).
The Renters' Rights Act (in force from 1 May 2026) has permanently abolished Section 21, converted all ASTs to periodic tenancies, and introduced civil penalties of £7,000 to £40,000 for non-compliance.
Frequently asked questions
Frequently asked questions
Why is rental stock falling across the UK?
Will rents keep rising in 2026?
What does the Renters' Rights Act mean for my tenancy agreements?
Should I raise my tenant's rent this year?
