Tenant demand at +7%, landlord instructions at -30%, rent expectations at their highest since early 2024. The rental supply squeeze is tightening exactly as demand recovers.
What Has Happened?
RICS published its October 2026 UK Residential Survey results on 12 November. The survey covers England, Wales and Scotland. On the lettings side, the picture is a widening mismatch between demand and supply. Tenant demand returned to positive territory: the net balance came in at +7%, up from -1% in September. That is a meaningful reversal given that September's flat reading had followed five months of positive demand. The autumn dip reversed quickly.
Landlord instructions continue to fall. The net balance of new landlord properties coming to market registered -30% in October, meaning three in ten more survey respondents reported a decrease in landlord supply than reported an increase. That figure tracks a trend running since at least mid-2025, when the Renters' Rights Act was finalised and landlords began making exit decisions ahead of its May 2026 implementation.
Rent expectations responded accordingly. RICS respondents' three-month rent expectations rose to a net balance of +41%, up from +29% in September and the strongest reading since early 2024. Agents and surveyors completing the survey are signalling, almost universally, that rents will rise over the next quarter.
On the sales side, buyer enquiries came in at -24, flat on the prior month. Expectations for sales volumes over three months registered -11, and over 12 months -17. The sales market and the lettings market are moving in opposite directions. That divergence, soft sales and tightening lettings, is the clearest possible signal for anyone deciding whether to hold or sell rental property right now.
Why This Matters to UK Property Investors
The -30% landlord instructions figure is worth sitting with. It does not mean 30% of landlords are selling. It means the net flow of landlord-listed property onto the lettings market turned sharply negative in October. More properties are leaving than entering. That contraction is cumulative. Each month of negative supply means the pool of available rental homes available to tenants shrinks a little further.
Tenant demand at +7% means more prospective tenants are actively seeking homes than in September. This is partly seasonal: October and November are historically strong months for student and young professional lettings demand as summer moves complete and autumn begins. But the RICS data shows demand recovering faster than supply is recovering, and there is no structural reason to expect supply to recover quickly. The incentives running against new landlord entries remain unchanged: Section 24 mortgage interest restrictions are still in place, the April 2027 income tax increase is confirmed, and the Renters' Rights Act has removed Section 21, which was the primary risk management tool many small landlords relied on.
Rent expectations at +41%, their strongest since early 2024, are the market's pricing signal. Agents and surveyors who transact lettings daily are telling RICS they expect rents to rise in the next three months. For a landlord holding property with tenancies rolling onto the new statutory periodic regime under the Renters' Rights Act, the Section 13 rent review process (using Form 4A) is the mechanism to capture that growth. Rents rising above inflation while prices hold flat or fall modestly is the fundamental case for BTL income returns in this cycle.
The sales side data matters too. Buyer enquiries at -24 and sales volume expectations at -17 for the next 12 months confirm the market remains a buyer's market for acquisitions. A landlord who wants to acquire is competing against a reduced pool of buyers in a market where sellers have been adjusting expectations for six months. That combination tends to produce the best entry prices.
The Risks Investors Need to Understand
Rent expectations at +41% are forward-looking sentiment, not a confirmed rent increase. RICS surveys what respondents expect, and expectations can be wrong. The October 2024 survey also showed strong rent expectations that partially materialised but did not reach the full level signalled. Investors planning acquisitions on the assumption of immediate and substantial rent increases are building in a risk the data does not fully support.
The -30% landlord instructions figure includes both voluntary exits and forced exits. Voluntary exits are landlords who have done the tax calculation and decided the return does not justify the headache. Forced exits are landlords in financial difficulty, possibly facing possession delays or refinancing crises. Buying properties from financially distressed sellers can mean buying their problems: sitting tenants in possession proceedings, deferred maintenance, properties where the yield looks attractive precisely because something is wrong with the asset.
Tenant demand at +7% is a national net balance. It masks regional variation that matters enormously for investment decisions. A +7% national reading does not tell you that Manchester is at +20% and certain commuter markets are still negative. RICS regional data is published separately. The national number is directionally useful, not operationally precise. I would not make a specific acquisition decision in Bradford or Stoke based on a national survey figure without looking at the regional data and the local letting agent's current void position.
Section 13 rent reviews under the Renters' Rights Act are not automatic. A landlord who wants to increase rent on a periodic tenancy must serve Form 4A, with at least two months' notice, and cannot implement the increase if the tenant refers it to a First-tier Tribunal. Tribunals can hold the rent at the existing level or even reduce it if comparables support a lower figure. The rent expectation signal is real. The mechanism for capturing it comes with procedural requirements that can slow or block the increase in specific cases.
Where the Opportunity Could Be
A -30% landlord instructions reading in October is partly seasonal and partly structural. The seasonal component means some of those properties will return to the market after winter. The structural component, landlords exiting because of the tax and regulatory environment, will not. Separating the two is the analytical task.
For BTL buyers, the most useful data point from the October RICS survey is not the demand or supply figure in isolation. It is the gap between them. When tenant demand is recovering and landlord supply is falling simultaneously, the properties that do enter the market at sensible yields let quickly and hold tenants. That reduces void exposure, which is the main drag on net yield in any northern or Midlands market. A Birmingham terrace that lets within two weeks of a tenancy ending costs roughly £175 less per vacancy event than one sitting empty for three weeks. At one turnover per year, that £175 compresses net yield meaningfully on a property grossing £8,500 annually.
London is a different story. Buyer enquiries at -24 nationally include a heavily weighted London contribution, and the RICS London lettings picture is different from the northern cities. In prime central London, supply has actually recovered somewhat as short-term let conversions reversed. For high-yield strategies in Manchester, Sheffield, Wolverhampton, Nottingham and similar cities, the October RICS data gives fresh support.
The 12-month sales volume expectations at -17 matter for anyone considering a purchase in the next six months. A market where most surveyors expect transaction volumes to fall over the next year is a market where patient buyers with pre-arranged finance can negotiate. The best transactions of Q4 2026 and Q1 2027 will go to buyers who are already set up to move: limited company structure in place, brokers engaged, solicitors briefed. Preparing now costs nothing. Waiting until you have found the property costs time and sometimes the deal.
Arsh's Investor View
The October RICS data confirms what I have been seeing on the ground. The properties letting fastest in Birmingham, Wolverhampton and Manchester right now are well-presented two and three-bedroom terraces priced close to the top of their local range. The ones sitting longer are either overpriced or in need of work that the landlord has not done. That is not unusual. What is unusual is that in this market, well-priced stock is letting in under two weeks. That was not happening in 2024.
The -30% landlord instructions figure does not surprise me. I know landlords in their fifties and sixties who have held portfolios for 20 years and have sold in the last six months. Some are doing the tax calculation. Some are tired of the compliance burden after the Renters' Rights Act. Some are both. What they are doing is creating the acquisition pipeline for the next generation of professional landlords, and that transition creates the best buying opportunities this market has produced in a decade.
Rent expectations at +41% are the strongest since early 2024. That partly reflects the supply squeeze. It also reflects the fact that inflation is running above target and tenants in employment are seeing wage growth that makes rent increases more absorbable than they were in 2022 and 2023. I do not expect a step-change in rents overnight. But the direction is clear and the RICS figure means agents and surveyors transacting daily are confident enough in that direction to put it in writing.
My practical takeaway from the October data: if you are sitting on cash or approved finance waiting for the right deal, October's market conditions are as good as 2026 is likely to get. Motivated sellers, low competition from other buyers, tight rental supply, rising rent expectations. The window is open. I would rather be three months early than three months late.
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Key Takeaways
- RICS October 2026 UK Residential Survey (published 12 November): tenant demand net balance recovered to +7%, up from -1% in September. New landlord instructions registered -30%. Three-month rent expectations rose to +41%, the strongest reading since early 2024. Buyer enquiries on the sales side came in at -24, flat on the prior month.
- Landlord supply is falling for structural reasons: Section 24 mortgage interest restrictions, the confirmed April 2027 income tax increase (24%, 44% and 49% for different rate bands), and the removal of Section 21 under the Renters' Rights Act. These incentives against new landlord entries are not reversing in the near term.
- Rent expectations at +41% reflect a market where demand is recovering and supply is tightening simultaneously. Section 13 rent reviews under the Renters' Rights Act (via Form 4A) are the mechanism to capture that growth. Two months' notice is required, and a tenant can refer the increase to a First-tier Tribunal.
- Sales volume expectations of -17 over 12 months confirm a buyer's market for acquisitions. Patient buyers with pre-arranged finance can negotiate in a market where most surveyors expect transaction volumes to fall. Getting the company structure, mortgage broker and solicitors in place before identifying the property costs nothing and can determine whether a deal completes.
- The -30% landlord instructions figure includes both voluntary exits (tax-driven decisions) and forced exits (financial pressure). Buyers should distinguish between the two: a motivated but solvent seller will transact cleanly, while a financially distressed seller may be selling a property with deferred maintenance, sitting tenants in proceedings, or other issues that require additional diligence.
Frequently Asked Questions
What did the RICS October 2026 UK Residential Survey show?
The RICS October 2026 UK Residential Survey, published 12 November 2026, showed tenant demand returning to positive territory with a net balance of +7%, up from -1% in September. New landlord instructions registered a net balance of -30%. Three-month rent expectations rose to +41%, the strongest reading since early 2024. On the sales side, buyer enquiries came in at -24 and expectations for sales volumes over the next 12 months registered -17. RICS respondents across England, Wales and Scotland contributed to the survey.
Why are landlord instructions falling in the UK rental market?
New landlord instructions on the RICS survey have been in negative territory since at least mid-2025. Three factors are driving landlord exits. Section 24 of the Finance Act restricts mortgage interest relief for personal-name landlords, limiting deductions to basic-rate tax relief only, which squeezes cashflow for higher-rate taxpayers. From April 2027, income tax on rental profits rises to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers, and 49% for additional-rate taxpayers. The Renters' Rights Act, which came into force on 1 May 2026, abolished Section 21 no-fault evictions and introduced rolling tenancies, increasing management complexity and the cost of possession proceedings for cases that require court action.
What does the RICS data mean for rental prices in 2026 and 2027?
RICS three-month rent expectations came in at +41% in October 2026, the strongest reading since early 2024. That figure reflects survey responses from letting agents and surveyors transacting daily, who are signalling broad expectations of rental increases over the next quarter. The underlying driver is a persistent mismatch between recovering tenant demand and falling landlord supply. How much rents actually rise will depend on local market conditions, tenant incomes, and whether any supply-side recovery materialises. The Section 13 rent review process under the Renters' Rights Act, using Form 4A with two months' notice, is the route for landlords to implement above-inflation increases on existing tenancies.
Is now a good time to buy buy-to-let property in the UK?
The October 2026 RICS data points to conditions that favour buyers: soft sales volumes (buyer enquiries at -24), falling transaction volume expectations over 12 months (-17), motivated landlord sellers contributing to supply, and tightening rental availability that supports strong yield and low void assumptions for well-presented property. For northern and Midlands markets such as Birmingham, Manchester, Sheffield, Wolverhampton and Nottingham, gross yields of 7% to 9% are available on standard residential stock, and the supply squeeze is tightest in those cities. Cash buyers and buyers with limited company structures and pre-arranged finance are best placed to negotiate in the current market.
How does the Section 13 rent review process work under the Renters' Rights Act?
Under the Renters' Rights Act, landlords who want to increase rent on a periodic tenancy must use the Section 13 procedure. This involves serving Form 4A, the prescribed notice of a rent increase, with a minimum of two months' notice. The new rent can only take effect at the start of a new rental period. If the tenant believes the proposed increase exceeds the market rate, they can refer it to a First-tier Tribunal within the notice period. The tribunal assesses market comparables and can confirm the increase, reduce it to market rent, or in rare cases award a rent lower than the current level. The tribunal route is a safeguard for tenants, not a blanket veto on rent increases, and the majority of Section 13 reviews that are not referred complete without challenge.
