UK Rental Market Set for Record Highs in 2026

Magnate Assets Market Insight – December 2025

Despite the seasonal slowdown seen in late 2025, new data confirms that the UK rental market 2026 is poised to hit fresh record highs, offering strong tailwinds for property investors entering the new year.

The Goodlord Rental Index shows average rents across England decreased modestly in November by 2.4% – from £1,276 in October to £1,245 – reflecting the usual winter lull. However, that short-term dip does little to change the bigger picture: UK rental market trends show rental inflation is rising year-on-year, and the chronic supply-demand imbalance remains a powerful force.

Key Takeaways for Investors:

• Rental prices are still 3.3% higher than this time last year, despite four consecutive months of seasonal softening, a key marker in ongoing UK rental market trends.

• The North West saw the strongest annual growth, with rents up 6.6% year-on-year, followed by 5% in the North East.

• Void periods are rising temporarily in line with seasonal patterns – currently averaging 24 days – but UK rental market 2026 forecasts show demand is expected to surge again in Q1.

   

Magnate’s Outlook: Strong Rental Growth Ahead

This moment of seasonal adjustment comes amid a much larger structural trend: sustained upward pressure on rents due to undersupply, legislative change, and consistent demand across key urban hubs.

“We are seeing a pattern develop,” notes Goodlord CEO William Reeve. “The pace of annual rental inflation is climbing again. This could point towards new rental records being set next year.”

At Magnate Assets, we interpret this as a buy signal for both UK-based and international clients seeking rental property investment UK opportunities. With interest rates stabilising, and the Renters’ Rights Act expected to further regulate the UK rental market 2026, tenant retention and yield growth are top-of-mind for landlords.

Where the Opportunities Are in 2026:

• North West – Manchester and Liverpool lead the way with a 6.6% rise in rents, alongside strong yield potential and capital appreciation forecasts. This region continues to play a key role in shaping UK rental market trends.

• North East – Steady price growth with low entry points, ideal for yield-seeking investors looking to enter rental property investment UK with limited capital.

• West Midlands – Despite longer void periods (currently averaging 30 days), rents are rising steadily, particularly in Birmingham and commuter towns, contributing to broader UK rental market 2026 dynamics.

• London – Still commanding premium rents, with fast re-lets (voids at just 20 days), making it attractive for short-term lets and high-end investors.

The Bottom Line: Smart Investors Are Positioning Now

While the market slows for winter, the trend lines are unmistakable. We believe the UK rental market 2026 will set new rental records, particularly in well-connected cities with university populations, employment growth, and regeneration investment.

If you're considering rental property investment UK – or expanding your portfolio – now is the time to align with rental momentum, not chase it.