A sharp decline in rental stock is gripping the UK's prime property market, with a significant number of landlords opting to sell rather than continue renting under the weight of the Renters' Rights Act. Nearly half (48%) of Savills' London agents point to the legislation as their top concern, citing higher mortgage costs and an increased tax burden as compounding pressures.
The private rented sector has suffered a substantial loss, with over 850,000 properties exiting the market in the last decade due largely to smaller landlords struggling to adapt to evolving regulations. Savills' analysts argue that these factors are driving many landlords to reassess their rental values and some to test the sales market, further reducing the supply of available homes.
Despite the challenges, prime rental values continue to rise, increasing by an average of 1.3% in prime regional markets during Q2 2026, with outer prime London witnessing a 1.2% hike. Prime central London's growth was more modest at 0.4%, indicating a shift towards slower, more stable increases. The South West (1.6%) and West London (1.4%) regions saw the strongest rental growth, with areas such as Fulham, Chiswick, and Wandsworth experiencing significant upward pressure on rents.
Interestingly, the report reveals that rental growth has been most pronounced for properties within the £100,000 per annum threshold under the Renters' Rights Act. In prime central London, rents increased by 0.7% in Q2 2026, contrasting with a mere 0.1% rise for higher-value properties. This demonstrates the legislative changes' impact on pricing strategies across different market segments. Tenants are reportedly becoming more discerning, prioritising accurately priced properties that offer value.