Rental forecast: What will happen in the second half?

The latest rental trackers show that rents are continuing their upward trajectory, but the market has undergone a huge transformation with the implementation of the Renters’ Rights Act in May. The question now is with the first half of 2026 over what’s likely to happen to rents in the second half?

In its Q2 update, Rightmove’s rental tracker showed that the average advertised rents of homes outside of London had risen by 1.9% during the quarter to a new record of £1,397 a month. The rise was the first quarterly rent record since Q3 2025 and was up from 1.6% last quarter and 2.3% on a year ago.

Record rents have also been seen in the capital, up 2% on the previous quarter and the largest quarterly rise in London since 2023. It set a new record of £2,791 per calendar month.

ONS figures published in July, meanwhile, showed that average UK monthly private rents rose 3.3% in the 12 months to June 2026, unchanged from the figures for May 2026. It says that UK rental annual inflation has generally been slowing since December 2024.

Supply is shrinking

The Rightmove figures show that rental supply has fallen for the first time since 2022, down 1% on Q2 2025. However, it said this was more driven by a drop in newly listed properties and a lack of sufficient supply continues to remain one of the biggest influencers pushing up prices.

Demand stable

Demand also remains strong but stable, with the average rental home receiving 10 enquiries, compared with 11 a year ago, but more than half its high of 22 in 2022.

Impact of affordability

The continued increases in rent growth are below the double-digit increases seen in 2022 and 2023, but affordability is still a challenge for tenants, especially as wage growth slows. In July the ONS reported annual wage growth of 3.4%, the same rate of growth it reported in May and June but down from the 3.6% reported in April.

Regional differences

Rental growth is also heavily dependent on location, with growth generally highest in the North East and the North West, which both recorded annual rent increases of 4.1% according to Rightmove, compared to 1.5% in the East Midlands and East of England. Meanwhile, a better balance of supply and demand in London is tempering rental growth there.

The rest of 2026

During the rest of 2026, we will also continue to see the impact of the Renters’ Rights Act as landlords adjust prices and the legislation puts a stop to unjustified rental increases and instances of rental bidding. The fact that the act also encourages tenants to stay longer is also likely to have an impact on rent setting since tenants will be moving on less frequently.

Rental growth will continue, but the patterns already seen and the continuing influence of factors such as affordability, supply and demand are likely to keep such growth to sustainable levels for the rest of the year, rather than the runaway prices seen a few years ago.

Cowell Norford buy, sell and let properties in Rochdale, Oldham and Bury, offering exceptional levels of service and knowledge that result in better outcomes for our clients. Contact us to find out more. 

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