Q3 2026: The rental

the last quarter showing some resilience.

Section 13 notice

market is shifting

A complex rental market

The Renters Rights Act 2025 has influenced the rental market in slightly different ways across average London housing( typically rents below £ 1,500 a week), Prime and Super Prime.

Overall, there is no doubt that it has, for Landlords, increased both the cost and risk of renting with investors shifting to different types of investment assets, away from real estate, and some Landlords simply choosing to sell. Fewer homes with similar( if not rising) levels of demand means rents are higher.

This has pushed average rent in London up by 3.3 % on average over the last year, but our data shows that the effect has been more subdued in Prime and Super Prime markets both decreasing annually by 3 % and 7 % respectively, though much of that was recorded in the first two quarters with the last quarter showing some resilience.

Section 13 notice

Section 13 notice is the mandatory legal process for landlords to increase rent for assured periodic tenancies under the new RRA2025. Landlords can only increase the rent once every 12 months, cannot raise the rent during the first year of a tenancy and must provide at least 2 months’ notice before the new rent can take effect.

We are now beginning to see s13 take effect for those assured shorthold tenancies that converted on 1 May. It is not yet clear whether tenants will start to appeal as a matter of course, given the only penalty is the burden of paperwork( and some depletion of the relationship with their landlords presumably). Irrespective of that, when s13 is served, tenants will need to be provided with some evidence of the proposed increase such as recent tenancy agreements for similar properties nearby, independent rental valuations, records of any improvements or repairs made to the property etc.

The jury is still out as to whether we will find a good balance in the market for annual rent increases but we continue to work with prospective tenants to make sure they understand their rights and obligations.

RICS Markey Surveys RICS latest Market Survey gives a clear indication of what we have been observing on the ground. Namely, continued strong demand in London coupled with a sustained low period of new Landlords’ instructions. This means general level of stock is declining, and with robust demand, levels of demand means rents are higher.

Section 13 notice is the mandatory legal process for landlords to increase rent for assured periodic tenancies

RPI

Source: Office of National Statistics – Retail Price Index

Rental Tracker

National Avg.( NA) £ 1,387 2.5 %

NA exc. London £ 1,176 1.6 %

Source: Latest HomeLet Rental Index Report

MARKET R3VIEW

upward pressure Marco on rental

R3 Indices value will likely Frustrated with the lack of open and continue over the

Previero reliable consolidated rental data in next Quarter quarter.

London, R3 started its own two rental Director & tracking indices in Q1 2019 for Prime and Research Super Prime London at 100 and 140 base

R3 Indices Lead at R3

While annual rents are down in both

Frustrated with the lack of Prime open and Super and Prime R3, reliable this

Marco

Indices reflects an adjustment post RRA2025 last year. The consolidated rental data broader Previero

in London trend over the, R3 last two years for example shows growth both

started Between its now own and December two rental markets tracking of 1 %. indices in

Director &

2026

2019

, we expect for Prime and

Research

Super Prime London

Super Prime to outperform as There is no doubt that the Prime and at 100 and 140 base Lead Super Prime markets have shown less

While wider market annual. Landlords rents are new legislation being implemented are down in both Prime increasingly more cautious and Super Prime this reflects average an rents increase adjustment by some 3 % about tenant selection, and we annually on average in London and post expect

RRA2025 this to be a last new feature year. The broader trend of the Between London Market now. and December more complex. over 2026 the, last we two expect years Prime for and example shows

growth Super in both Prime markets to outperform of 1 %. as The Renters Rights Act

COVID

RECOVERY

There legislation no doubt tightens that London the Prime ' s and Super

30 %

Prime wider Jan markets 20 – Jun 21 have. Landlords shown Jul 21 – Sep are 22 less sensitivity to

-11.7%

32.5 % the 20 % broader increasingly trend more of cautious rental values across about tenant selection, and we London as a result of the new legislation

10 % expect this to be a new feature being of implemented the London Market from. 1 May 2026. We

relationship with their landlords presumably). Irrespective of that, when s13 is served, tenants will need to be provided with some evidence of the

London £ 2,272 4.2 %

proposed increase such as recent tenancy agreements for similar properties nearby, independent rental valuations, records of any improvements or repairs made to the property etc.

FIGURE 1 – Property Market Dashboard: Quarterly summary of key performance indicators

Q1 2026

30 %

20 %

10 %

0 %

-10 %

Q2 20

Q3 20

12.0 %

Q4 20

8.0 % 4.0 % 0.0 %

MARKET R3VIEW

Q1 2026

R3 Prime Index

Index 132.2

Index 3.4 %

132.2

Q1 21

23 24 24 24 24 25 25 25 25 26 26 26 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

APR MAY JUN

3.2 % 3.4 % 3.9 %

AREAS AVG. PCM QTR CHANGE ANNUAL CHANGE

3.4 %

Annual

0.2 %

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

+ 3.3 % + 3.1 % + 3.3 %

Annual

0.1

The

Quarter

Q4 23

Q1 24

Q2 24 expectation

25 Q2

25 Q3

25 Q4

Source: RICS Monthly Market Surveys

26 Q1

3 mths % change responses( down / up / same)

26 Q2

26 Q3

RICS latest Market Survey gives a clear indication of what we have been observing on the ground. Namely, continued strong demand in London coupled with a sustained low period of new Landlords’ instructions. This means general level of stock is declining, and with robust demand, upward pressure on rental value will likely continue over the next quarter.

RPI All Items: % change over 12 months RPI is a measure of inflation and it is trending upwards primarily as a result of a surge in global energy and motor fuel costs driven by geopolitical conflict in the Middle East, alongside rising domestic service sector prices and continued wage pressures in the UK economy. Inflation is likely going to continue trending upwards in the next three months.

Rental Price Tracker As predicted in our last newsletter Rent continues to be up both by quarter and annually, Nationally and in London, as a direct result of legislative changes brought in by the Renters Rights Act 2025 and future additional tax burdens for Landlords. This is tightening supply. Average quarterly change in London overall is at 4.2 % quarterly and 3.3 % annually.

Tenants should receive

Evidence comparable tenancy

Tenants can challenge at the agreements, independent First-tier Tribunal for a

Frustrated with the required

The lack of open valuations and, or repair records. negligible fee, with the reliable consolidated rental data in tribunal tribunal setting rent at openmarket level( but no higher

London, R3 started its own two rental

Weigh up suggested route tracking indices in Q1 2019 for increase Prime, publicly and available than the landlord ' s proposal)

Super Prime London

Practical at 100 and rent 140 data and base liaising with the

The Renters Rights Act reality landlord directly before

Between sensitivity to the broader While trend annual of rental appealing now and December at R3 rents are down in both

Tenants should receive legislation tightens London ' s values across London as a result of the Prime and Super Prime, this 2026 reflects, an we expect Evidence Prime comparable and tenancy agreements, independent from 1 May 2026. We adjustment are seeing overall post RRA2025 last R3 can year always. The help to

Super required support tenants Prime looking to to outperform valuations, or repair as records.

broader trend over R3 the’ s role last two gather years market information to for example shows growth in validate both proposed increases. securing tenancies becoming slightly The Renters Rights Act legislation markets of 1 %. tightens London ' s wider

Weigh up suggested market. increase, publicly available There is no doubt that the Prime Practical rent data and liaising with the

FIGURE 2 – QUARTERLY RENTAL % CHANGE Quarterly Prime and Super Prime Rents % change Landlords are increasingly more Super Prime markets have shown less reality landlord directly before sensitivity FLUCTUATING to the broader trend cautious of rental RRA 2025 about tenant appealing selection, values across STABILITY London as a result of the EFFECT and we expect this to be a new

new legislation Oct 22 – being Jun 25 implemented Jul 25 – Sep 26 from 1 May 2026 7.3 %. We are seeing feature overall 3.4 of

% the London R3 can always Market help to. average rents increase by some 3 % support tenants looking to

R3’ s role gather market information to annually on average in London and

Marco Previero validate proposed increases. securing tenancies becoming slightly more complex. Director & Research Lead at R3

0 %

-10 %

FIGURE 2 – QUARTERLY RENTAL % CHANGE Quarterly Prime and Super Prime Rents % change

Q2 20

Q3 20

Q4 20

Annual

0.2 %

Quarter

Q1 21

Q2 21

Q3 21

COVID

Q4 21

Jan 20 – Jun 21-11.7 %

Q1 22 are seeing overall average rents increase

R3 Super Prime Index SPOTLIGHT ON … by some 3 % annually on average in London

R3 Super Prime and Index securing tenancies SPOTLIGHT becoming ON slightly … Index s13 notice

188.3 more complex.

“ Spotlight On” this quarter

7.1 features the tenant’ s

Index % s13 notice

188.3 perspective on s13 notices Annual

Appealing is time consuming and could

0.1 % damage relationships with your Landlord. So 7.1, what % considerations should be

Quarter

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

RECOVERY

Q4 23

Jul 21 – Sep 22 32.5 %

Q1 24

Q2 24

Q3 24 tribunal route

Q4 24

Q1 25

Q2 25

FLUCTUATING STABILITY

Oct 22 – Jun 25 7.3 %

Q3 24

“ Spotlight On” this quarter features the tenant’ s perspective on s13 notices

Tenants can challenge Appealing at the is time consuming and could First-tier Tribunal for a damage relationships with your Landlord. negligible fee, with the tribunal setting rent at openmarket level( but no higher weighed before doing so?

So, what considerations should be

than the landlord ' s proposal)

Q3 25

LBM November December 2026 Pages Alternative Digital 208 | Page 35

Q3 2026: The rental

market is shifting

MARKET R3VIEW

132.2

188.3 perspective on s13 notices Annual