UK Rental Market Faces Its Biggest Shortage in a Decade
- My Property Organiser
- Dec 14, 2025
- 3 min read
The UK is experiencing one of its most severe shortages of rental properties in over a decade, with agents across the country reporting unprecedented demand, rising tenant competition and growing strain on the private rented sector (PRS).
This is great news for landlords when it comes to occupancy rates and increased revenue however, the downward pressure on regulation and taxation means landlords needs to ensure that they have all the correct paperwork to avoid potential heavy fines.
According to Estate Agents from major cities including Manchester, Birmingham, Leeds and Bristol, rental listings are being filled in record time, often within hours of hitting the market. Viewings remain oversubscribed, and bidding wars, once considered rare outside of London, have become increasingly common across regional markets.
An agent in Manchester said:
“It’s the tightest supply I have ever seen. We simply don’t have enough properties. Every landlord who lists a home receives dozens of enquiries instantly - they are over the moon"
What is causing the shortage of rental properties?
The causes of the crisis are multi-layered. A wave of smaller landlords began exiting the market between 2022 and 2025, driven by rising interest rates, higher regulation, increased taxation and broader uncertainty. Many landlords who previously operated with slim margins found themselves squeezed further by mortgage changes, safety compliance costs and unpredictable maintenance expenses, causing them to sell up and leave the market.
The other big issue that still remains is the lack of supply. The UK government has acknowledged that there is a huge shortage of homes and new institutional build-to-rent developments are not being delivered fast enough to fill the gap.
A London-based market analyst describes the phenomenon as “structural, not temporary.” “The country hasn’t built enough housing to support population growth, and existing stock isn’t evenly distributed. When you combine that with regulatory headwinds that have pushed some landlords out of the sector, you end up with a deep supply deficit.”
Even local authorities are now signalling concern. Several councils that expanded licensing schemes in 2025 are facing criticism for inadvertently accelerating landlord exits, though the schemes were introduced to improve standards. “There is a delicate balance between improving rental quality and maintaining rental supply,” notes one policy advisor. “We are now seeing the consequences of getting that balance wrong.”
So what does this mean for Tenants and the UK Rental Market?
For tenants, the situation is increasingly difficult. Rising competition for limited stock has pushed rents to new highs, and affordability pressures remain acute in both urban and suburban areas. Multiple agents report tenants offering to pay several months’ rent upfront or increasing their bids just to secure a home.
So which landlords are benefitting?
When demand for rental properties is higher than supply, especially to the extent that is currently sits at, it is great news for landlords. However, although higher demand provides increased rents, there has been many changes to legislative obligations, tax pressures and compliance requirements, that continue to add friction to the day-to-day management of rental homes.
Many landlords express concern that the system “expects more while giving less breathing room,” particularly with Making Tax Digital and new documentation standards on the horizon.
What’s clear is that 2026 is shaping up to be another turning point in the UK rental market. The shortage of available homes, coupled with sustained demand, points toward a sector that is under significant long-term strain. Unless supply increases drastically, landlords can benefit, however, the landlords that manage them correctly and stay organised are the ones who benefit, as otherwise, the ones who are disorganised and don't know whats due and when, face fines and missed payments, eroding the increases they are receiving in income.
