Prime rental values continued to rise during the second quarter of 2026 as landlords increased rents to offset higher borrowing costs, taxation and the impact of the Renters’ Rights Act (RRA), according to Savills.
The estate agency’s latest prime rental indices showed rents increased by 1.3% across prime regional markets and by 1.2% in outer prime London during the three months to June. Prime central London recorded more modest quarterly growth of 0.4%.
Rental growth was strongest across more domestic South West (1.6%) and West London (1.4%) markets, with neighbourhoods including Fulham, Chiswick and Wandsworth seeing the most upward pressure on rents.
Rental growth across London has been strongest among properties falling within the scope of the RRA. In prime central London, rents for homes below the £100,000 per annum threshold rose by 0.7% in Q2, compared with 0.1% for higher-value properties.
There was a similar picture across outer prime London where, over the past year, rents for properties affected by the RRA increased by 2.7%, compared with 1.7% for those above the threshold.
In prime regional markets, the 1.3% quarterly rent increase added to the 1% growth in Q1 that offset the pressure on rents seen in the second half of 2025.
Growth was led by the South West and Cotswolds and regional towns and cities, with these areas reporting quarterly growth of between 1.7% and 1.9%.
Jessica Tomlinson, research analyst at Savills, said: “Landlords are continuing to adapt to a changing regulatory environment following the introduction of the Renters’ Rights Act, while also contending with higher mortgage costs and an increased tax burden. As a result, many are reassessing rental values across their portfolios to help offset rising operating costs.
“At the same time, the implementation of the RRA has further prompted some landlords to test the sales market, further reducing the amount of stock available. All this combined has supported growth in rents, despite economic headwinds. However, increases are strongest in markets most impacted by the RRA.”
Almost half (48%) of Savills agents in London and 71% outside the capital said the RRA was the biggest concern of landlords on their books, with the abolition of Section 21 most frequently cited as the key issue.
Agents also reported that around half of landlords were considering reviewing rental values, while 82% of London agents said landlords expected rents to increase, compared with just 30% of tenants.
Looking ahead, Savills said constrained housing supply was expected to continue supporting rental values, forecasting rental growth of between 6% and 13% across prime markets over the next five years.
