UK rental market: are landlords or tenants better off right now?

A challenging landscape for landlords and tenants

At first glance, the UK rental market seems to favour landlords strongly. In many areas, demand for rental homes remains high, leaving tenants facing substantial rents and competition for available properties.

Yet, the picture is more complicated for landlords. Higher mortgage costs than in previous years, increased maintenance bills and changes to taxation and regulation can all eat into rental profits. Some landlords have responded by selling properties or reconsidering their investments.

Right now, which group is better off? It’s less clear cut than you might think.

The squeeze on tenants: rising rents and dwindling supply

A shortage of available rental homes is putting pressure on tenants in many parts of the UK, particularly in London.

According to Zoopla's September 2026 rental market report, the number of homes available to rent across the UK was 3% lower than a year earlier, while the number of new properties coming onto the market had fallen by 6%.

In cities such as London, competition is particularly intense. The number of available rental properties in the capital has fallen by 6% over the past year, rising to 13% in inner London.

Zoopla also found that there were an average of 5.3 enquiries for every rental property advertised nationally, the highest level for almost two years.

Tenants are also paying more in rent, with average UK rents rising by 3.8% in the year to August 2026, according to the Office for National Statistics (ONS). This brought the average monthly rent to £1,400, although annual rent increases have slowed considerably compared with previous years.

With no alternative to unaffordable properties, many renters are struggling with rising costs.

The latest English Housing Survey, covering 2024/25 and updated in July 2026, found that 32% of private renters had difficulty paying their rent, up from 27% five years earlier. It also revealed that 5% of private renters and 14% of social renters had fallen into arrears during the previous year.

The pressure is particularly apparent in the capital. The survey found that private renters in London paid an average of £393 a week in 2024/25, compared with £207 elsewhere in England.

According to the ONS, average rents in London also accounted for 41.6% of median private-renting household income in 2024, compared with 36.3% across England.

Mounting costs and tax pressures for landlords

While landlords are in an inherently more privileged position, the picture isn’t necessarily rosy for them.

Although interest rates have fallen from their peak, landlords refinancing mortgages taken out when borrowing was cheaper may still face substantially higher monthly payments while there seems little sign that rates will reduce further in the coming months.

If tenants fall into arrears due to higher rent, landlords may have to cover mortgage payments and other property costs without receiving the expected rental income

Landlords also face paying more tax on their profits. Following a change of rules that was phased in between 2017 and 2020, individual landlords letting rental property can no longer deduct mortgage expenses from their rental income to reduce their income tax bill.

Now, landlords can only claim a 20% tax credit, subject to certain limits, which represents a substantial tax hike for those who pay the higher or additional rate of tax. A reduction to the capital gains tax (CGT) allowance, now £3,000, also means landlords may face a bigger tax bill when they sell a property at a profit.

And taxes will increase further due to changes announced in the 2025 Autumn Budget. From April 2027, there will be 2% increase in the tax rate on rental profits.

Landlords who are basic rate taxpayers will pay 22%, while higher and additional rate taxpayers will pay 42% and 47% income tax respectively on their taxable property income in England, Wales and Northern Ireland. The mortgage interest tax reduction will also increase from 20% to 22%.

These changes apply to individual landlords rather than properties held through limited companies, which are subject to corporation tax.

With rising costs, some landlords are considering selling their properties and investing the funds elsewhere to reduce costs and minimise risk.

Why rental properties are important

Landlords often face sharp criticism in the news, but responsible private landlords are an essential component of our economy.

Even though owning a property outright is the ultimate goal for many renting is often the only option for those unable to save a deposit or qualify for a mortgage. Others choose to rent because of work, family circumstances or the flexibility it offers.

Private rental properties also help meet housing demand where social housing is in short supply. England has lost more than 250,000 social rented homes over the decade to 2023, according to government housing statistics reported in 2024.

However, the availability of rental properties does not necessarily make them affordable. Increasing the supply of homes across the private and social sectors is important to improving tenants' choices.

The challenge for landlords 

Property has long been viewed as a savvy long-term investment prospect, drawing many people to the buy-to-let market. 

Learn more: The best areas for buy-to-let in the UK

Lots of landlords see their property as a way to save for retirement, The government's 2024 English Private Landlord Survey found that 56% viewed their rental property as a long-term investment contributing to their pension.

While some landlords may be privileged, many come from more humble backgrounds. They may be renting out their home while providing live-in care to a family member or choose to rent out a relative’s home following their death.

Many landlords also purchased when prices were far lower and may be unable to make the same investments today.

Landlords aren’t necessarily wealthy enough to brush off rent arrears or absorb higher mortgage repayments due to interest rate rises.

The government’s England Private Landlord Survey 2024 found that 45% of landlords own one rental property, with 38% owning between two and four. Just 17% of landlords own more than five properties.

However, many people invest in property using a buy-to-let mortgage with the sole intention of renting it out. Their rental income must cover mortgage interest, maintenance, insurance, tax and other costs before they can make a profit.

Although interest rates have fallen from their peak, landlords coming off older fixed-rate deals may still face higher repayments. Some may respond by increasing rents where the market and tenancy rules allow, or by selling their properties.

Another risk for landlords is that some tenants will neglect their properties and fail to pay rent by choice rather than because of genuine hardship. This can leave landlords with a huge bill for rent arrears and repairs.

The impact of the Renters' Rights Bill

Landlords also face stricter regulations ollowing the introduction of the Renters' Rights Act 2025, which became law in October 2025.

The first changes took effect in England on 1 May 2026, giving tenants greater protection while introducing new responsibilities for landlords.

The changes come in three phases:

• Phase 1 (May 2026): Introduced more rights for tenants, including a ban on no-fault evictions, an end to fixed-term tenancies and tighter rules on rent increases. Landlords must also consider reasonable requests to keep pets and cannot accept rental bids above the advertised price.

• Phase 2 (from late 2026): Introduces a new database of private rental properties, with landlords required to register and pay an annual fee. A new landlord-funded Ombudsman will also handle disputes between tenants and landlords, although compulsory membership is not expected until 2028.

• Phase 3 (date to be announced): Introduces more demanding property standards, including a new Decent Homes Standard and rules requiring landlords to address serious hazards within specified timescales.

The changes are designed to improve tenants' security and housing conditions, but could also increase administration and compliance costs for landlords.

Are UK landlords selling their properties?

Some landlords are selling their rental properties in response to higher mortgage costs, tax changes and increased regulation.

However, recent research suggests the picture is more mixed than a widespread landlord exodus.

According to Hamptons, 9.2% of homes listed for sale in June 2026 had previously been advertised for rent within the past five years, down from 11.3% a year earlier. The estate agent said landlord sales had slowed following a surge before the Renters' Rights Act took effect in May.

However, some landlords are still looking to expand their portfolios.

Further Hamptons research found that landlords accounted for 14.1% of all home purchases in Great Britain in July 2026, with investors taking advantage of a slower housing market to negotiate lower prices.

This suggests that while some landlords are leaving the market, others are buying properties, including homes sold by fellow landlords. A change of ownership does not necessarily mean a property is lost from the rental market.

What’s squeezing the UK rental market?

There are not enough rental houses to meet demand, and this pushes up rental prices in areas where competition for homes is strongest.

Soaring demand for properties is driven by a range of factors, including population growth and the rise in single-person households. At the same time, many landlords are selling up, and there are fewer rental properties on the market.

High house prices and the difficulty of saving for a deposit also mean some people are renting for longer.

At the same time, the supply of available rental homes remains constrained. According to Zoopla's September 2026 rental market report, the number of homes available to rent was 3% lower across the UK than a year earlier, with a 6% fall in London.

So, are landlords or tenants better off right now?

Ultimately, tenants seem to be worse off right now.

Even if landlords end up with tenants in arrears and ultimately have to sell their property due to rising mortgage payments, they may still have an asset to sell, although some could face substantial losses or debts.

Legal hassle and losing an investment may be frustrating and financially devastating, but for tenants, losing a rental property can mean losing the home they live in.

For tenants, the stakes are so much higher. Many people are stuck in unaffordable or substandard housing, which is, in the worst cases, damaging their health.

Lots are being forced out of their childhood neighbourhoods and away from their jobs due to high rents.

Some renters also face the risk of homelessness or mounting debt when they can no longer afford their housing costs.

The Renters' Rights Act has strengthened protections for tenants in England, but it cannot solve the underlying shortage of affordable homes. While landlords face genuine financial pressures, tenants without savings or alternative housing options may have much less room to manoeuvre.  

Get expert property and mortgage advice

It can be hard to determine if entering the buy-to-let market is the right decision for your unique circumstances.

Landlords face changing tax rules, mortgage costs, and new responsibilities under the Renters’ Rights Act. Tenants may be weighing up rising rents against saving for a deposit.

A professional adviser can help you understand how these pressures apply to your own finances, whether you’re thinking of becoming a landlord, reviewing an existing property, or planning your next move as a renter.

Unbiased can quickly match you with a qualified financial adviser to offer guidance on your property goals.