Rents should rise by 4% in 2026 in prime central and outer London, Knight Frank has predicted.
The forecasts were revised up from 3.5% due to government policy, as some landlords are selling ahead of the Renters’ Rights Bill.
Other factors are recent speculation around plans to charge national insurance on rental income, as well as stricter green regulations.
In terms of the sales market, Knight Frank downgraded its expectations, saying that prices should only increase by 1% this year.
The real estate consultancy said: “A combination of high supply and faltering confidence means we now expect slower UK house price growth this year and in 2026.
“By contrast, we think rental value growth will be marginally higher in 2026 as government initiatives produce unintended consequences – again.”
The number of new prospective buyers in the UK was 8% lower in the year to August compared to the previous 12 months.
The low point for the sales market this year was April, when nil rate bands for stamp duty increased and US President Donald Trump announced a series of trade tariffs, sparking short-term instability on financial market.
