The year 2026 will be defined by a series of challenges for those investing in the rental sector. According to UK rental services provider Housing Hand, while none of the challenges are insurmountable, the year ahead will require careful navigation and a range of derisking measures.
"From an investment perspective, certainty is good, so the fact that the Renters' Rights Act has received royal assent it a positive step forward," said Jeremy Robinson, group founder and CEO at Housing Hand. "However, major regulatory change of this nature demands careful consideration if investors are to navigate it successfully. Add to that the market and pricing shifts we've observed over the past year, and the stage is set for a testing 2026."
Three key subsectors will be facing particular challenges during 2026: purpose-built student accommodation (PBSA), Build to Rent (BTR) and houses in multiple occupation (HMOs). University halls also face a difficult year ahead. Each subsector's challenges are unique, though all will feel the impact of the Renters' Rights Act implementation, the first measures of which come into force from 1st May 2026, with a second raft of measures to follow later in the year.
Many PBSA investors are already feeling unsettled after falling occupancy levels this year. While demand from students overall has declined by around 1% to 2%, according to Housing Hand, the decline in demand for PBSA has been greater at around 7% to 8%. Pricing models are at the heart of this, with PBSA prices felt by some to have hit a ceiling.
Investors now need to think carefully about whether they're building the right products in the right locations, as price peaks have been hit in several key university cities, including Leeds and Durham. However, cities such as Birmingham and London continue to thrive, and other cities still provide scope for affordable schemes that balance build and operational costs carefully.
Exacerbating this from an investment perspective is how long it takes to dispose of or change the use of schemes that are already under construction or operational. It means many PBSA providers will need to take a hard look at their pricing models over the year ahead.
Long-term considerations also look set to impact Build to Rent investors. While BTR has done well in terms of absorbing PBSA occupancy losses, scheme locations will require careful consideration if these tenants are to become part of BTR's long-term model. Planning delays are also posing a challenge for many schemes, meaning investors are unable to see the returns they would like as swiftly as they might wish.
For HMOs rented to students, the Renters' Rights Act introduces some particular challenges. From 1st May 2026 onwards, HMO landlords won't be permitted to sell tenancies until six months before the start date. While this won't impact the 2026/27 academic year, its impact will certainly be felt looking ahead to the 2027/28 booking season, with any student wanting to secure a home more than six months in advance having to turn to purpose-built student accommodation instead.
As HMO investors prepare for this significant market shift, Housing Hand predicts a year of consolidations, with larger HMO owners using the opportunity for strategic growth and absorbing smaller providers as they do so. An influx of institutional investors is also anticipated, with the potential that this type of professionalisation of the subsector will drive up rents.
As HMOs tend to be well-placed close to universities and adept at picking up students keen to move out of halls after their first year, it's likely that they will continue to attract second- and third-year students even as affordability and product models shift.
HMO investors are also having to think carefully about tenancy start dates in relation to void periods. Housing Hand is already seeing HMO landlords move their tenancy start dates to earlier in the year, such as early June, in order to reduce the impact of summer holiday void periods. However, not many students are keen to take on a property from early June, posing another challenge for those investing in the sector.
University halls are also facing a tough landscape in 2026. Halls are facing the same issues as the rest of the property market in terms of the need to be both affordable and profitable, adding to the financial strain that universities are enduring on every front at present. The ageing nature of many universities' halls compounds the issue, driving up operational and maintenance costs while making it difficult to compete with more contemporary accommodation solutions.
"PBSA, BTR and HMO investors are all facing a tough year ahead, as are university halls," said Jeremy Robinson, group founder and CEO at Housing Hand. "Each market segment has a different risk profile, so it requires a different type of support. Having worked across the breadth of the rented sector for well over a decade, Housing Hand is uniquely positioned to understand those needs and provide tailored support, helping investors navigate market changes with greater confidence and less risk."
