Letting agency Chestertons expects rents to rise by around 2% in Greater London and 3% in Prime Central London in 2026. 

And it says some of that rise may be down to the Renters Rights Act. 

It says that strong demand from tenants, combined with a steady supply of rental properties, is expected to support this growth, while ongoing affordability pressures and the introduction of the Renters Rights Act (RRA) are likely to moderate it. 

Despite initial concerns about the impact of the RRA, many landlords are continuing to let their properties rather than sell, helping to maintain supply and overall stability in the market. The relatively limited financial impact of rental taxes and council tax surcharges further supports a balanced outlook.

It says there were three key takeaways from 2025:

• ‘Reluctant’ landlords unable to exit due to slower sales market: Various legislation and tax changes over recent years, including the RRA, encouraged some private landlords to consider exiting the market. However, the slow and uncertain sales market prevented many from doing so, resulting in continued letting and supporting rental stock levels;

• Tenant affordability pressures persisted: With rents consuming an estimated 40% of household incomes, tenants have proved unwilling to absorb rent increases, inhibiting rent inflation. Affordability pressures are expected to persist, partly due to frozen income tax thresholds until 2031; and 

• Budget supports market stability: Despite widespread concerns in the months leading up to the announcement, the Autumn Budget had a very limited impact on landlords. While the freeze on income tax thresholds may slightly reduce tenants’ disposable incomes, the 2% increase in rental income tax and the High-Value Council Tax Surcharge are unlikely to materially affect most landlords.

Looking ahead to 2026, the agency says that if the sales market improves as anticipated, some landlords may be able to sell rental properties they had previously held back, potentially reducing rental supply.

Combined with the ongoing strong tenant demand, this could cause rents to resume their upward trajectory, underpinning the modest growth it expects across Greater London and Prime Central.

At the same time, measures aimed at supporting tenants’ disposable incomes, along with the limited financial impact of rental taxes and surcharges on landlords, should help prevent extreme rent increases. The Renters Rights Act, which comes into force on May 1, will restrict most landlords from accepting offers above asking price and asking prices may increase slightly as a result of this.

In Prime Central London, the recent increase in buy-to-let mortgage applications indicates that the area remains an attractive proposition for investors. Well-located properties in areas of low supply will be in high demand amongst tenants, pushing rents up faster – up to 3% – than in other areas of London.

Overall, it anticipates a balanced and stable rental market in 2026, giving landlords confidence to continue letting while offering tenants greater security and choice.