Savills warns the RRA is causing prime rental market concern

An international real estate firm is warning that landlords in the prime rental market are selling up due to higher mortgage costs and an increasing tax burden.

A report by Savills reveals landlords are also concerned about the Renters’ Rights Act, with almost half (48%) of Savills agents in London saying it is the primary concern for landlords.

The news comes as more than 850,000 properties have left the private rented sector in the last decade as small landlords struggle with the Renters’ Rights Act.

Reducing the stock available

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 Renters’ Rights Act 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 Renters’ Rights Act.”

Ms Tomlinson added: “Tenants in prime central London are becoming increasingly discerning, with demand focused firmly on best-in-class properties that offer strong value for money. With less urgency in the market, right pricing is becoming increasingly important, with tenants more price-sensitive and willing to shop around.

“Landlords who ensure properties are accurately priced from the outset will attract and retain the best quality tenants.”

Prime rental market values

According to the data, the vast majority (82%) of letting agents in London say the prime rental market landlords they represent expect rental values to increase, compared with just 30% of tenants who believe rents will rise.

In the prime rental market, rental values increased by 1.3% across the prime regional markets and by 1.2% in outer prime London during Q2 2026. Prime central London recorded a more modest increase of 0.4%, signalling a return to slower but steadier rental growth.

Rental growth was strongest in the more domestic South West (1.6%) and West London (1.4%) markets, with neighbourhoods including Fulham, Chiswick and Wandsworth seeing the greatest upward pressure on rents.

Prime central London was more subdued by comparison, with rents rising by 0.4% during the quarter, according to Savills.

However, across the capital, rental growth has been strongest among properties that fall within the scope of the Renters’ Rights Act. In prime central London, rents for homes below the £100,000 per annum threshold increased by 0.7% in Q2, compared with just 0.1% for higher-value properties.