A pivotal year for the rental market

THE POWER OF THREE-LETTER ACRONYMS

The Assured Shorthold Tenancy (or AST) was introduced in January 1989. The buy-to-let (or BTL) mortgage came later, being launched in the auspicious surroundings of the RAC on Pall Mall on the 24 September 1996.

Together they were transformational, though it was not until the turn of the century that their impact on residential property investment started to become apparent.

DELAYED RESPONSES

Changes in tax legislation, albeit to deter rather than support property investment, also took time to show their hand.

A 3% stamp duty surcharge (introduced in 2016) was initially swallowed by investors. When it was upped in 2024 to 5% (8% in Scotland), it became less easy to digest. Meanwhile, the impact of restricting tax relief on mortgage interest only really became apparent when mortgage rates increased.

TAKING TIME TO REASSESS

And so, it remains a little early to confidently say what the precise legacy of the Renters’ Rights Act will be. This is especially so in the prime market, where the changes do not apply to the most expensive properties with a rent of over £100,000 per annum.

For now, we know that it has made landlords more cautious, causing many to reassess their options; irrespective of whether they are invested in mainstream or prime.

INITIAL MARKET IMPACTS

And there are signs that this is impinging on the amount of stock available to rent. In turn that is supporting rental growth, particularly for smaller properties, much as we saw north of the border after the regulatory changes here in 2017.

Despite strong five-year appreciation, for now annual prime rental growth is relatively modest, reflecting current pressures on tenants’ household finances.

How much that builds ultimately depends on how many landlords decide to call it a day or look to take advantage of the buying opportunity currently on offer. Evidence suggests that will also take time to become clear, as figures from HMRC of all places, attest.

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Understanding the Renters’ Rights Bill

_{Read the articles within Prime UK Residential – Autumn/Winter 2026 below}