UK Rental Market Stability Amid Rising Buy-to-Let Mortgage Rates

UK Rental Market Trends in Q1 2026

As of April 2026, the average advertised rent for homes outside London has remained steady from Q4 to Q1 at £1,370 per month, marking the first time since 2017 that rents have not increased quarter on quarter. In contrast, within London, rents rose by 0.7% from Q4 2025 to Q1 2026, reaching £2,736 per month, according to the latest index from Rightmove. Year on year, average rents outside of London are still 1.6% higher, and within the capital, they have risen by 1.4%.

The average rental home now receives eight enquiries, down from 11 a year ago and significantly lower than the 29 at the 2022 peak. More than a quarter of rental listings have had their price reduced, the highest proportion for this time of year since Rightmove began recording this metric in 2012. Despite these changes, Rightmove reports no major signs of shifts in market dynamics ahead of the Renters’ Rights Act coming into effect on May 1, 2026.

Supply and Demand in the Rental Market

The number of available homes to rent is now 3% higher than a year ago, with supply at its highest level for this time of year since 2021. Despite the increase in supply, demand remains strong, with Chestertons head of residential Adam Jennings noting a clear pick-up in lettings activity, particularly towards the end of March 2026, with a noticeable increase in viewings and agreed lets.

Impact of Rising Buy-to-Let Mortgage Rates

The average two-year buy-to-let mortgage rate for a landlord with a 25% deposit is now 5.79%, up by 93 basis points from 4.86% before the war in Iran started. To put this into perspective, a landlord with a £200,000 interest-only buy-to-let mortgage would see their monthly cost rise from £810 to £965, an increase of £155 per month or £1,860 per year. This significant increase in borrowing costs for landlords may filter through to the market at a later stage, potentially putting upward pressure on rents.

Market Outlook Amid Regulatory Changes and Global Events

With the Renters’ Rights Act coming into force from May 1, 2026, there has understandably been some uncertainty among landlords. Despite this, the strength of demand seen in late March 2026 has provided reassurance, with many landlords continuing to see competitive levels of interest and strong rental values. The impact of the war in Iran on borrowing costs and the forthcoming Renters’ Rights Act will be key factors to watch in the coming months, as they could both have significant implications for the UK rental market.