Private rents across the UK rose by 3.5% in the 12 months to February 2026, unchanged from January, taking the average monthly rent to £1,374, according to the latest Office for National Statistics (ONS) data.
At the same time, house price growth continued to soften, with average UK values increasing by 1.3% in the year to January 2026, down from 1.9% the previous month, leaving the average property price at £268,000.
The divergence between steady rental growth and easing house price inflation is increasingly influencing investor behaviour, particularly within the buy-to-let and specialist finance markets.
Regionally, rental growth remains uneven. In England, rents rose by 3.6% annually to £1,430, with the North East recording the highest increase at 7.6%, while London saw the weakest growth at 1.7%. Wales and Scotland recorded rental increases of 5.5% and 2.4% respectively.
Against this backdrop, market participants point to wider structural challenges affecting both transaction volumes and investor sentiment.
SIGNIFICANT REDUCTION IN SALES VOLUMES
Tomer Aboody, director of specialist lender MT Finance, says: “Although the price change whether up or down is minimal, what really stands out from these figures is the significant reduction in sales volumes, especially in England, which are nearly 40% down year-on-year.
“We have seen a lack of desire from the government to help kick start or boost the property market, and if anything, they have created even tougher conditions.
“Real estate is the lifeblood of the UK economy, and until this is boosted, we will continue to see not only a stagnant property market, but also a stagnant economy.”
The combination of softer price growth and constrained supply is also feeding through into how landlords are approaching borrowing and portfolio management.
Alex Upton, managing director, specialist mortgages & bridging finance, Hampshire Trust Bank, adds: “Landlords are navigating a rental market where supply remains constrained and confidence is under pressure. Demand continues to outstrip available stock in many areas, but the more meaningful shift is in how investors are responding to a more complex and less predictable operating environment.
“We are starting to see lenders become more selective, and in some cases step back from parts of the market. That matters. When funding options narrow at the same time as regulatory and cost pressures increase, it creates a more challenging landscape for brokers and landlords to operate within.
“Landlord behaviour is adjusting accordingly. Expansion is no longer the default. Many are reassessing exposure, refining portfolios and prioritising assets that offer stronger and more reliable income. More experienced investors are not stepping away, but they are being far more deliberate in how they allocate capital and structure their portfolios.
“These conditions are reshaping funding demand. Landlords are not simply refinancing, they are restructuring. That means releasing capital selectively, consolidating borrowing and repositioning portfolios to reflect tighter margins and higher compliance expectations. It requires lenders who can assess cases on their merits, take a long-term view and structure funding around how portfolios operate in practice.
“In this environment, consistency and clarity are not optional. Where funding remains accessible, decision making is clear and lenders continue to engage with complexity, confidence holds. Where it does not, it falls away quickly. That is where the real risk sits. Without stability, pressure in the rental market does not ease, it builds.”
The figures suggest that while rental demand continues to underpin income returns, a more cautious lending environment and weaker transaction activity are driving a shift towards restructuring and selective investment, rather than expansion.
