Higher mortgage rates locking renters in for longer and continued low investment by landlords is set to drive rents up 4-5% by the end of the year.

Zoopla reports that after a sharp slowdown during 2024 and 2025, average rents are now 2.6% higher than a year ago, at £1,340 a month.

The supply of homes coming onto the rental market was down 6% in August, according to the firm, meaning that there are now 3% fewer homes for rent across the UK than a year ago - and new investment in rental homes remains low as landlords face higher costs and greater regulation. The combined impact of rising demand and falling supply means the number of enquiries per UK rental listing - 5.3 - is 6% higher than a year ago and the highest level for almost two years.

Allison Thompson, chief lettings officer at LRG, says a previous dip in landlord investment is limiting replacement stock. However, she adds that in London and the South East, falling property prices substantially improve yields. “Not surprisingly, we are seeing established investors looking to expand,” says Thompson. “Clearly serious landlords recognise this unusual set of circumstances as a rare opportunity which they are keen to capitalise on.”

Incorporate

Meanwhile, new analysis of Companies House data by Hamptons shows that fewer landlords are rushing to incorporate new buy-to-let companies. Its analysis shows that 41,483 buy-to-let firms were set up in the first eight months of 2026, marking an 8% decline from the 44,802 established over the same period in 2025.

Despite the slowdown, the total number of companies continues to rise. By the end of August, 469,165 buy-to-let businesses were operating across Great Britain, up from 443,272 at the end of 2025.

Driven

A large part of the buy-to-let incorporation boom was driven by the one-off structural shift whereby existing landlords transferred properties they already owned into limited company structures in response to tax changes, explains Hamptons’ head of research Aneisha Beveridge. She adds: “We’re now reaching the tail end of that trend. Increasingly, the landlords who stand to benefit financially from incorporating existing properties have already done so.”

* New analysis by Redwood Bank shows that professional investors are becoming more concentrated within their home regions, rather than seeking geographic diversification for its own sake. One of the biggest changes has come in the East Midlands, which saw an increase of 15% of investors buying in their local area between 2021 and 2026, closely followed by the South West which saw a 14% uplift.

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