KEY CHANGES ON 1ST MAY 2026

The Act impacts all landlords and tenants with Assured Shorthold Tenancies (ASTs) in England and applies to both new and existing tenancies. Other tenancies aren’t affected, such as those with annual rent in excess of £100,000 per year and company lets. But still, the vast majority of the mainstream market and most of the prime market will be affected by the changes.

WHILE NOT AN EXHAUSTIVE LIST, SOME OF THE KEY CHANGES* ARE:

• Fixed term tenancies no longer apply. Tenancies won’t have contractual end dates and will run on a rolling basis, for example, monthly. Any pre-agreed break clauses will be invalid.

• Section 21 ‘no fault’ notices are abolished. Landlords will need to have a reason to serve notice, such as an intention to sell.

• During the first 12 months of a tenancy, a landlord cannot serve notice to move back into the property or sell it. The tenant has a 12-month protected period, provided they do not breach the terms of the tenancy.

• Rent can only be increased once a year, following a formal process based on market rent and comparable evidence. Any pre-agreed rent increases will not be valid, and a tenant may challenge an increase they believe is not in line with market rent.

• Landlords won’t be able to accept offers over asking rent nor will they be able to accept lump sum rental payments at the beginning of a tenancy.

* For more details and the full list of changes coming on 1st May 2026, head to our Renters’ Rights Act hub page.

THE LONGER TERM ROADMAP

Notably, these changes form part of a wider network of regulatory and tax changes facing landlords.

Exposure to some of the tax changes announced in the November 2025 Budget will depend on how a property is owned. Meanwhile, local authorities are responsible for whether and how local licensing schemes are applied and, as such, the impact will be location specific. And the requirement to improve the energy efficiency of a property will depend on its current EPC rating.

A ‘NEW ERA’ FOR THE RENTAL MARKET

So, as the rental market evolves, who are going to be the landlords and tenants of the future?

LANDLORDS

Some private landlords have already reassessed their property portfolios in response to regulation, taxation or increased costs, meaning there has been an overall contraction of the PRS market. According to our analysis, the total value of housing stock in the private rented sector has fallen by £79 billion since 2022.

While some of this stock has been bought by larger, full-time landlords, a chunk has moved into the owner-occupied sector.

And while there hasn’t been the mass exodus some feared, it seems inevitable that smaller landlords with outstanding mortgage debt will continue to review their options. How and when they act will be affected by changing market conditions in both the sales and lettings markets.

At the same time, accidental landlords are expected to be thinner on the ground. Therefore, stock constraints are likely to become more pronounced, particularly where these two landlord groups dominate, with new investment likely to be focused on higher yielding properties.

In comparison, larger, international and institutional owners will be better equipped to weather regulatory change. Typically, they will take a longer term outlook, be more able to spread risk across their portfolio, have the management systems in place to deal with a greater regulatory burden and benefit from economies of scale in applying new minimum energy efficiency standards.

TENANTS

There is no such thing as a typical tenant for prime property. It varies by location, property type and time of year. But there are some identifiable trends in different parts of the market.

Prime central London continues to have an international appeal on a global stage.

The high stamp duty costs associated with buying, compounded by recent changes to non-dom tax rules, will continue to push international demand into central London’s prime rental market. Current global events are likely to accentuate that in the short term.

Such international demand is also a feature of the market through the belt of North West London that runs from St John’s Wood to Hampstead, though to a lesser degree.

In other prime London markets, demand for flats is dominated by young professional renters in the early part of their careers, who are yet to buy their first home. Recent upward pressure on interest rates is likely to support demand from them in the short term, with improved access to homeownership over the longer term unlikely to fully offset the expected supply constraints in the rental market.

Tenants of family homes are more likely to be renting through choice or doing so in response to life events, whether that be a change in relationship status, exploring a new area before committing to a purchase or refurbishment of their main home. Such practical drivers of demand are unlikely to see much change.

The prime regional markets tend to be more consistently domestic.

Regional towns and cities benefit from a high proportion of needs-based, younger tenants who are likely to remain the bedrock of demand for smaller homes.

More specifically, students and graduate sharers typically look to rent around university start dates and major employers’ graduate intakes, adding to the seasonality of the market. Here, the lack of rental payment in advance will temper the competitive advantage of those historically offering this to a prospective landlord.

By comparison, as you move out into the commuter belt, so the proportion of older tenants looking for family housing increases.

Here, young professional couples and families make up a much higher proportion of demand, given an increased need for space. They are likely to be chasing a smaller pool of available rental stock, given the profile of current landlords.

BRINGING THINGS TO A CONCLUSION

Finally, it is worth remembering tenants across the prime markets, not only initially rent, but also move on for a multitude of reasons.

This is unlikely to change in response to new regulation, meaning that while they will enjoy greater security of tenure, the rich tapestry of life will continue to underpin a turnover of rental stock. That means landlords need to continue to match their offering to the strongest seams of demand in their area.

^{*Source: Savills Research using The Lettings Hub 2024–2025}

To read more of our Residential Research please visit our Residential Hub

_{Read the articles within Prime UK Residential – Spring/Summer 2026 below}