Summer 2026

The UK rental market continues to show steady progress as it settles into a more balanced phase following several years of significant change.

For landlords, this creates a more sustainable investment landscape, with healthy tenant demand, consistent returns, and far less of the volatility experienced in recent years.

Rental Market at a Glance

• 2.1% – Annual rental inflation for new lets across the UK
• 3.8% – The North East recorded the highest increase in rental values
• 0.4% – The West Midlands experienced the smallest increase in rental values
• £1,321 – Average monthly rent across the UK

So, what does this mean for landlords?

Rental Inflation

The rental market continues to deliver stable and sustainable growth, with annual rental inflation for new lets reaching 2.1% across the UK as of June 2026*.

Average monthly rents now stand at £1,321*, reflecting a more measured rate of growth while continuing to provide dependable returns for landlords.

However, rental performance is increasingly divided between two distinct market segments.

Properties in more affordable locations, where rents are below £750 per calendar month, are seeing annual rental growth of around 5%, significantly above the national average.*

Meanwhile, higher-value markets, with rents above £1,250 per calendar month, are experiencing more restrained growth, typically in line with or below the UK average.*

This contrast highlights where many of today’s strongest investment opportunities can be found. Lower-cost markets, including parts of the North of England and Scotland, continue to outperform, while higher-priced cities are naturally constrained by affordability limits.

Looking ahead, rents are forecast to increase by around 2–3% during the remainder of 2026*, offering landlords continued and predictable income growth within a more stable market.

Gross Yields

For landlords focused on investment performance, the overall outlook remains positive.

Although rental growth has moderated, gross yields continue to perform well—particularly in lower-value regions where property prices remain more accessible and rental growth is stronger.

Northern regions and more affordable markets continue to offer:

• Stronger yield potential
• Greater opportunities for rental growth

In comparison, London and many southern markets typically generate more modest yields, offset by long-term capital stability and consistently strong tenant demand.

As always, understanding local market conditions remains essential when assessing both performance and investment opportunities.