Get your latest rental market update

The UK rental market continues to move in a steady, sustainable direction as it settles into a more balanced rhythm after several years of rapid change.

For landlords, this means more predictable performance, healthier levels of demand, and a market that’s delivering reliable returns without the volatility seen in previous years. Here's a quick snapshot of the current rental market:

Now let's explore what this means for landlords across the country.

Rental inflation

The rental market continues to deliver steady returns for landlords, with annual rental inflation at 1.9% for new lets across the UK as of March 2026.*

Average rents currently stand at approximately £1,319 per month - solid, consistent growth that remains manageable for tenants while continuing to provide reliable returns for landlords.

With rents expected to rise by approximately 2-3% in 2026, landlords can expect income streams that continue to outperform many traditional investments, all the while maintaining market competitiveness.*

Regionally, performance varies - with some markets delivering particularly strong results. Liverpool, for example, has seen rental increases of 4.6%, with rents now averaging £915 per calendar month (pcm).* These more affordable markets demonstrate clear headroom for further growth, and this localised performance highlights that opportunities for above-average returns remain for landlords who understand the nuances of their regional markets.

Gross yields

For landlords focused on returns, the picture is an encouraging one. Through the first part of 2026, average gross yields across the UK have reached 7.2% - a modest step up from the 7% seen across the whole of 2025, and comfortably ahead of the 5.8% recorded in 2019, in the period immediately prior to the pandemic.**

Regional variation remains considerable, with the strongest yields located in the north of England and Wales. The North East leads the way at 9.6%, followed by Wales at 8.4%, the North West at 8.3%, and Yorkshire and the Humber at 8.2%. Even across the South, yields of over 6% remain well within reach, though London sits marginally below that threshold, averaging 5.9%.**

For landlords in northern regions, a typically smaller equity position can go a long way - often stretching to cover both a substantial deposit and the stamp duty liability on a second home - making for a rather compelling investment case. In the South, genuine buy-to-let opportunity remains for those who take the time to carefully assess local demand, property suitability and rental pricing potential.

Rental demand

Rental demand is settling into a more sustainable pattern, helping to support long-term market stability. Although demand has eased by 14% from its peak, with tenant enquiries now at their softest level in six years, it still remains comfortably above pre-pandemic norms, offering continued reassurance for landlords. On average, properties are currently spending just 20 days on the market.*

The underlying fundamentals of the rental market, however, remain sound. Demand continues to be underpinned by limited home‑buying options for certain groups who rely on the private rented sector.

Ongoing barriers to homeownership - such as affordability pressures and the need for larger deposits - ensure continued, long‑term demand for rental accommodation. This helps landlords minimise void periods, which are essential components of successful property investment.

Rental supply

Tenants now benefit from greater choice, with rental stock up 11% year-on-year.* Some of this increased supply comes from homes shifting from the sales market into lettings, as well as properties freed up by first-time buyers who were previously renting.

Several factors are contributing to this growth in supply, including more stable mortgage rates encouraging new investment, and improved first-time buyer activity releasing additional rental homes.

With the Renters' Rights Act coming into effect from 1 May 2026, the role of an experienced agent in securing the right tenants and navigating new regulatory requirements has never been more important. Our established expertise ensures landlords receive the comprehensive guidance they need to remain compliant while maximising returns.

The rental market is stabilising after several years characterised by high demand and limited supply. For landlords, this rebalancing means:

• More realistic pricing strategies may be required in certain areas
• Properties may take slightly longer to let
• Gross yields remain attractive - and are improving
• Regional markets continue to offer varied opportunities

Looking ahead, the outlook remains reassuring. With rents expected to rise by around 2–3% in 2026, growth is set to continue at a steady, manageable pace, supported by improving supply and resilient tenant demand. With persistent barriers to homeownership sustaining long‑term need for rental property, landlords can rely on a solid foundation for returns.*

While the number of homes available to rent is recovering, there is no indication of a surge in new investment activity that would dramatically accelerate supply growth. All of this suggests that the UK rental market continues to present opportunities for landlords with a long‑term strategy, particularly those who work with experienced agents who understand the nuances of local market dynamics.

Want to find out more? Speak to your local branch team today and book your property in for a free, up-to-date rental valuation.

*Statistics from the Zoopla Rental Market Report, March 2026

**Connells Group data, March 2026

MKT/UKON/270326