The new year marks a perfect opportunity for landlords to reassess their rental budgets and pricing for 2026, which is particularly important given the upcoming implementation of the Renters’ Rights Act and the impact of the Autumn Budget.

Implications of the Autumn Budget

The Autumn Budget introduced several potential changes for landlords that, in the future, will swallow up a greater share of rental income. As of April 2026, there will be a 2% increase in tax rates on property income. Meanwhile, the following year will see the introduction of the new high-value property surcharge for landlords if you are renting out luxury or high-end properties worth £2 million or above. These changes follow the immediate rise in stamp duty for landlords announced in the previous Autumn Budget. 

Impact on rental prices

Although only a small proportion of landlords will be hit by the high-value property surcharge, it’s the extra tax to be applied to rental income that will hurt landlords most. It will inevitably shrink net yields on properties in the private rented sector. Your likely option is to raise rents to maintain the returns you currently enjoy, especially since you also have running costs, your buy-to-let mortgage and unexpected bills to consider.

But it isn’t always that easy.

The need to meet market rate

Rents must be set at the local market rate, whether your costs mean that your ideal rent exceeds that or not. This will become even more critical with the introduction of new processes within the Renters’ Rights Act, which will come into force from May 1.

The Renters’ Rights Act changes

From this point, rental bidding will be forbidden, which means there’s no longer any possibility of demand over-inflating your prices from prospective tenants offering their best prices. Instead, a property can be let only at the price at which it was advertised, even if tenants are offering more.  

That price must also be evidenced as being comparable to the local market rate, with tenants able to legally challenge it, if not. Evidencing increases through local market data and similar property comparisons will be a key responsibility for landlords and letting agents.

The process of rent reviews will also change. From May 1, rent reviews can be issued only once a year and must follow a strict issuing process which is also dependent on certain conditions being met.

Likely rental price rises

With all these caveats, forecasting likely increases in market rents and matching them to ensure you remain competitive must be a key strategy. Demand continues to outpace supply in the rental sector, which will continue to push up rental prices. According to Rightmove, this will push average advertised rents up by an additional 2% over the course of 2026. This follows a similar rise in 2025. Savills also predicts 2% growth in 2026, with 12% growth expected by 2030.

A changing market

But rental growth can also not be guaranteed. As mortgage rates continue to fall, there are two impacts. Landlords can access cheaper deals to expand portfolios, increasing the supply of properties in the rental sector. Meanwhile, tenants have a greater ability to move onto the housing ladder as buying affordability improves.

The changes mean that rapid, frequent increases are neither a viable nor a legal strategy after May 1. As such, it’s vital to consider sustainable rental levels rather than quick wins, and that means careful forecasting and budgeting will be key.