The UK's private rental sector is experiencing a significant imbalance as tenant demand continues to climb while the number of available homes shrinks, according to the latest UK Residential Survey from the Royal Institution of Chartered Surveyors (RICS) for June 2026. This growing disparity is poised to drive up rental costs across the country, impacting renters and landlords alike.
The survey revealed a robust increase in tenant demand, with a headline net balance of +18%, marking the strongest reading since May 2025. This surge in demand, however, is not being met by an adequate supply of rental properties. Landlord instructions remained firmly in negative territory at -18%, indicating a continued reduction in the number of homes being offered for rent. This trend suggests that more landlords are exiting the market than entering it, exacerbating the supply squeeze.
RICS anticipates that this supply-demand imbalance will inevitably lead to further rent increases. The organisation projects a 2.5% rise in rents over the next 12 months. Jeremy Leaf, a North London estate agent and former RICS residential chairman, noted that while lettings activity is proving more resilient than sales, the quantity of enquiries is outweighing quality. He attributed the hardening of rents, particularly for family houses, to the shortage of supply, largely driven by landlords selling their properties due to future tax and regulatory concerns, including the forthcoming Renters' Rights Act.
The broader housing sales market also remained subdued in June, although there were some nascent signs of improvement. The headline house price balance stood at -33%, a marginal change from -34% in May and -35% in April. Regional variations persist, with the South East and South West of England reporting more negative price trends than the UK average, while Northern Ireland and Scotland showed more positive sentiment. Near-term price expectations, though still negative, improved to -32% from -44%, and a net balance of +8% of respondents expected prices to rise over the next 12 months, up from +6% previously.
Tarrant Parsons, RICS' head of market research, suggested that June's results offer cautious encouragement that the worst of the market slowdown might be passing, with several key indicators moving in a less negative direction for a second consecutive month. However, he cautioned that any improvement remains fragile, particularly given renewed political uncertainty and ongoing concerns about inflation and borrowing costs. Until there is greater clarity on both the political landscape and the trajectory of interest rates, housing market activity is likely to remain relatively subdued in the near term.
New buyer enquiries remained negative at -29%, though this was an improvement on previous months. Similarly, newly agreed sales were weak at -32%, but also showed a slight improvement. Over the next year, respondents expect sales volumes to be broadly flat. Tom Bill, head of UK residential research at Knight Frank, highlighted that while housing market activity is improving from a low base, buyers and sellers face continued uncertainty, including speculation about potential property tax changes in the upcoming Budget.