Where Rents Are Rising 2.5 Percent Without the Drama
After three years of exceptional and in many cases unsustainable rental growth, the UK rental market has found a pace that is considerably more useful to landlords who are trying to plan a portfolio than the volatility of 2022 and 2023 ever was.
Zoopla’s forecast of 2.5% rental growth across 2026, published in its December 2025 Rental Market Report and consistent with subsequent data, describes a market that is delivering reliable income growth rather than sharp, demand-driven spikes that attract regulatory attention and compress affordability toward breaking point.
The NRLA’s own market commentary is direct about what this means: landlords can expect income growth in 2026, but at a pace that reflects a more normalised market rather than the emergency conditions that drove double-digit increases in some areas over the previous rental boom. For landlords setting rent levels, negotiating renewals, and modelling portfolio returns, 2.5% is a planning number with real substance behind it.
What is driving the forecast
The 2.5% forecast rests on a specific supply and demand dynamic that shows no sign of resolving quickly. Rental supply remains 23% below pre-pandemic levels according to Zoopla’s March 2026 Rental Market Report. Despite an 11% increase in available rental stock year-on-year and a meaningful reduction in enquiries per available property, the structural undersupply that has characterised the rental market for the past four years remains firmly in place.
Demand has eased from its exceptional post-pandemic peaks, driven by a 78% decline in net migration since 2023 and an improvement in first-time buyer purchasing activity as mortgage affordability improved. But the high cost of buying a home continues to act as a structural floor under rental demand. Households that cannot access ownership continue to rent, and the rental stock available to house them has not grown proportionally.
That combination, easing but sustained demand against a persistently undersupplied backdrop, produces the 2.5% trajectory that Zoopla expects to hold through the remainder of 2026.
Where growth is running ahead of the national figure
The national average, as always, obscures meaningful local variation. Zoopla’s April 2026 Rental Market data shows that rents in affordable markets below £750 per month are growing at close to 5%, more than double the national rate. At city level, Belfast recorded 10.8% annual growth, Carlisle 8.1%, and Chester 7.4%. Liverpool, Newcastle, and Glasgow are running at 3% to 4.6% annual growth. These are markets where the combination of lower entry rents and sustained tenant demand is producing the most consistent and commercially significant growth.
At the other end, London is seeing rental growth of approximately 1.6% annually, and Birmingham and Dundee have recorded slight falls in rents for new lets. The national 2.5% forecast reflects the aggregate of these divergent local conditions.
What 2.5 percent means in practice for portfolio management
A 2.5% annual rent increase on a property letting at £1,000 per month generates an additional £25 per month or £300 per year. Across a portfolio of five properties at that level, it is £1,500 annually. That is not dramatic. But it is consistent, it is above the long-run average rental growth rate for the UK, and it is occurring in a market where the Section 13 rent increase process now governs how and when increases can be implemented.
Landlords who build their Section 13 review calendar now, track the effective date of each tenancy’s last increase, and serve Form 4A with two months’ notice before that date, will capture the full 2.5% each year. Those who do not will capture less.
The drama of 2022 and 2023 has passed. What remains is a rental market that rewards consistent, well-managed professional landlordship with steady, reliable returns.
Talk to our lettings team about rental market performance
This article was originally published by BriefYourMarket and is reproduced here with their permission.
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