Tenant demand in the private rental sector strengthened in August while landlord supply continued to contract, according to the latest RICS UK Residential Market Survey, which points to further rental price growth in the months ahead.
The landlord instructions indicator registered a net balance of -14%, remaining firmly in negative territory. Against that backdrop, a net balance of +18% of survey participants reported an increase in tenant demand over the past three months, part of the non-seasonally adjusted monthly lettings dataset.
Short-term rental price expectations rose sharply, with a net balance of +44% of respondents anticipating a rise over the next three months, up from +33% in the previous survey. Looking further out, respondents forecast average rents across the UK to increase by around 3% over the next twelve months.
The Renters' Rights Act featured prominently in surveyor commentary across multiple regions. Several contributors flagged landlord exits from the market as a direct consequence of the legislation, with many citing reduced returns and regulatory burden as the primary drivers.
One surveyor noted that well-presented stock was letting almost immediately with minimal voids, but that new instructions remained difficult to secure. Others pointed to tenants facing pressure to provide personal guarantors from family members or friends as competition for available stock intensifies.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said, "Continuing uncertainty in the sales market has resulted in more lettings activity, with tenants taking advantage of their new ability to end fixed-term constraints under the Renters' Rights Act.
"Rents have held firm, supported by supply shortages, especially of larger flats and family houses, as exiting landlords are not being replaced fast enough so standards are slipping too."
Tom Bill, head of UK residential research at Knight Frank, said, "Rising rental values reflect one of the unintended consequences of the Renters Rights Act. Landlords are setting higher asking rents to reflect the greater risks they face around void periods and rent collection, against the backdrop of lower supply."
Rachel Springall, finance expert at Moneyfactscompare.co.uk, noted that rising rents are compounding cost of living pressures for tenants at a difficult time for mortgage affordability.
"Rents are expected to rise by around 3% over the next 12 months, adding to the cost of living pressures for renters. Tenant demand is getting stronger at the same time new buyer enquiries are weak, and looking ahead, sales listings are not expected to materially change over the short term.
"Affordability issues are glaringly obvious amid the lack of more affordable housing, yet this is not helped at a time where mortgage rates are rising. The Moneyfacts Average New Mortgage Rate has risen to 5.62%, up 0.72% since the start of March 2026 when it stood at 4.90%. Major lenders, which include HSBC, NatWest, Barclays, Lloyds Bank, Santander and Nationwide, have all increased rates since the start of September, and there could well be a second wave of rises if swap rate volatility is prolonged.
"There will be some prospective buyers deciding it is a safer bet to continue in the private rental market for now, but with the RICS landlord instructions indicator remaining in negative territory, there is the obvious danger that tenant demand continues to outstrip supply, putting prolonged upward pressure on rents."
Sales
On the sales side, the August survey continued to portray a subdued but gradually improving picture. New buyer enquiries returned a net balance of -19%, the least negative reading since January and the fifth consecutive month of improvement. Agreed sales registered -17%, up from a low of -38% in April, while near-term sales expectations moved to -3% from -13% previously.
House prices continued to drift lower at the aggregate level, with the headline net balance reading of -28% only marginally improved from -29% in July, though the downward momentum has moderated since the April trough of -35%. Northern Ireland continued to diverge from the broader UK trend, with prices still rising, while the North West recorded sustained gentle growth. London remained among the weaker regions in net balance terms.
