Cost pressures and new legislation shaping landlord decisions, study finds
The proportion of landlords intending to increase rents in the coming year has fallen, according to new research by mortgage market consultancy Pegasus Insight.
The firm’s Landlord Trends report for the second quarter of 2025 found that 61% of landlords expect to raise rents over the next 12 months, a decline from 78% recorded a year earlier.
For those landlords planning to raise rents, the average expected increase stands at 6%, up from 5% in the same period last year. This aligns with recent figures from the Office for National Statistics, which reported that average private rents in the UK rose by 5.7% in the year to August 2025, reaching £1,348 per month.
The data suggests that while fewer landlords are planning rent hikes, those who do are still considering substantial increases. Many appear to have already adjusted rents to reflect current market conditions, while others are increasingly conscious of tenants’ ability to pay.
The most common reasons cited for planned rent rises remain ongoing running costs, including maintenance, compliance, and mortgage payments, highlighting continued pressure on landlord profitability.
Forthcoming legislation is also influencing landlord behaviour. The Renters’ Rights Bill, expected to receive Royal Assent by November and come into force from mid-2026, will restrict rent increases to once per year and introduce broader reforms such as the abolition of Section 21 and the transition to open-ended tenancies. Some landlords are acting in advance of these changes, seeking to ensure their rent levels are sustainable before the new rules take effect.
“Landlords remain under pressure from higher costs and policy change, and the instinct to raise rents remains strong,” said Mark Long (pictured right), founder and director at Pegasus Insight. “But our research shows that the market may be reaching an affordability ceiling. When rent levels rise too far, demand can falter – this is price elasticity in action, and many landlords recognise that pushing further risks losing tenants or facing longer voids.
“At the same time, the forthcoming Renters’ Rights Bill is influencing decisions now. With annual rent increase limits and tribunal challenges on the horizon, landlords are reviewing their portfolios carefully.
“This is a delicate period for the private rented sector: if costs keep rising as regulation tightens further, we may see a fresh wave of rent inflation despite the moderation in intentions revealed by our latest research.”
For mortgage brokers, the survey findings signal ongoing pressure on landlord finances from rising costs and regulation. Brokers should be prepared to advise clients on affordability, refinancing options, and the impact of upcoming legislative changes, as landlords may seek guidance to manage tighter margins and adapt to evolving market conditions.
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