Rents will climb as house price growth slows – Knight Frank

Britain’s housing market faces a period of subdued house price growth, while rents will rise, according to property consultancy Knight Frank.

The firm says there will be 4% rent rises across the UK this year, and they’ll go up by 3.5% in each of the next two years.

The rise is down to a growing number of landlords selling up before the Renters Rights Bill takes effect, potentially making possession recovery more complex and increasing voids.

Fears of EPC improvement costs are also prompting landlords to reassess their portfolios, and recent speculation about national insurance charges on rental income has added to fears.

Government’s ‘unintended consequences’

Tom Bill, the head of UK Residential Research at Knight Frank, said: “We think rental value growth will be marginally higher in 2026 as government initiatives produce unintended consequences – again.

“The small upwards revision reflects a possible period of disruption after the Renters’ Rights Bill is introduced later this year and the backdrop of renewed tax uncertainty.”

He added: “Unfortunately, ‘tax uncertainty’ is a phrase likely to be repeated when we revisit our forecasts after November’s Budget.”

House price growth slashed

Knight Frank has also slashed its house price predictions for both this year and next, pointing to high supply levels and wavering buyer confidence ahead of the Budget.

Average UK property values are now predicted to climb just 1% this year, which is a dramatic reduction from its May projection of 3.5%.

The firm’s prediction for 2026 has been trimmed to 3% from a previous 4% estimate.

Mr Bill said: “The low point for the UK housing market was in 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 markets and some of those UK growth downgrades.

“The market spent the next few months getting back on its feet, helped by a stable rate environment and the presence of sub-4% mortgages.”

Landlords selling BTL properties

The glut of homes for sale is mainly from delayed sales from the stamp duty threshold adjustments and postponed transactions from the General Election period.

However, Knight Frank also says there’s an increasing number of buy to let investors exiting the market with their properties adding to the tally.

There’s now a supply-demand imbalance, with new prospective purchasers down 8% year-on-year through August, while fresh listings increased by 6% over the same timeframe.

Despite three Bank of England rate cuts since January, mortgage costs have remained relatively stable because markets had already factored in these reductions.

Sub-4% mortgage products have helped stabilise conditions somewhat after April’s market low point.

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