Prime London's Rental Squeeze: What the Renters' Rights Act Means for Landlords in 2026

Every conversation we have had with landlord clients this summer has circled back to the same question: hold or sell? The Renters’ Rights Act, which came fully into force on 1 May 2026, has done more to reshape the prime London lettings market in three months than almost any policy change in the last decade. If you own — or are considering buying — rental property in prime London, the numbers now tell a very different story to the one being discussed a year ago.

A Rental Market in Reverse

At the start of the year, prime central London rents were falling. By February 2026, annual rental growth stood at minus 3.7%. By July, that figure had swung to plus 5.7% — one of the sharpest reversals the prime lettings market has seen in recent memory.

The cause is not renewed demand alone. It is supply. During 2025, the total value of long-let transactions across prime London properties renting between £1,000 and £5,000 per week fell by more than £23 million, from £379.4 million to £356.3 million, with 372 fewer deals agreed than the year before. Landlords have been leaving the market faster than tenants can be housed, and the Renters’ Rights Act has accelerated that exit.

Why the Act Is Tightening Supply

Section 21 Abolition and Periodic Tenancies

Section 21 “no-fault” evictions ended on 1 May 2026. Fixed-term assured shorthold tenancies have been replaced by rolling periodic tenancies, and tenants can now give two months’ notice to leave at any point. For landlords, this removes the certainty that came with a fixed term and changes how a rental property needs to be managed, priced and marketed. Some landlords have decided the trade-off is no longer worth it and have sold up; others have simply become more selective about who they let to and on what terms, which is itself tightening the pool of available stock.

Enforcement Is Ramping Up

This is not a policy sitting quietly in the background. In August 2026, the Mayor of London announced approximately £400,000 in funding for Renters’ Rights Act enforcement, including training for newly recruited enforcement officers across London boroughs. Compliance is no longer a paperwork exercise — it is actively being checked.

What This Means If You’re Letting in Prime London

The Case for Holding

For landlords with well-maintained stock in strong locations, the rental growth reversal is good news. Reduced competition among landlords, combined with tenants increasingly choosing to stay put as choice narrows, is supporting rents in a way that simply was not happening twelve months ago. If your portfolio is compliant and well managed, this is arguably a stronger letting market than it has been in years.

The Case for Selling

Not every landlord is positioned to benefit. Portfolios that were already marginal on yield, or that carry compliance gaps built up over a fixed-term-tenancy era, face rising operating costs and a materially different regulatory environment. For some clients, this is the moment to exit — and with sales transaction volumes up 14% across the capital and super-prime activity in the £15m–£20m bracket up almost 40% year-on-year, there is genuine buyer appetite on the other side of that decision.

Getting Compliance Right

Whichever side of that decision you land on, the practical priorities are the same: review tenancy documentation for compliance with periodic tenancy rules, tighten record-keeping ahead of increased enforcement activity, and take a clear-eyed view of whether current yields justify the new cost of doing business. This is not a market to navigate on assumptions carried over from last year.

Every portfolio is different, and the right call — hold, restructure or sell — depends on specifics that a market commentary can’t capture. I’ve spent over 40 years in London property acquisitions and brokerage, and I work directly with landlord clients on exactly this kind of decision. I don’t make excuses. I make results.