For many landlords, the biggest decision for 2026 might be whether to stay in the rental market, rather than how to expand. Upcoming changes within the Renters’ Rights Act, most of which come into force from May 1, signal a new era for the PRS with increased power for tenants and comparatively less for landlords. It means that for some, the consideration is whether there’s a future in the market at all.
But with change comes opportunity. The ultimate aim of the reforms is to improve property standards and rental practises for landlords and tenants alike, as well as drive out unscrupulous landlords, which means it becomes a more attractive market to be a part of.
As some landlords choose to leave, their exit creates space for new ones to enter the sector or for existing landlords to expand portfolios. And, in a market that continues to be hampered by over-demand and under-supply that’s an encouraging trend.
So, if you are looking to buy in 2026, what are the yields, costs and risks that you need to consider?
Changes within the Renters’ Rights Act
Changes within the Renters’ Rights Act mark the biggest risk that new or expanding landlords must consider. Tightened regulations and greater enforcement equate to an increased likelihood of fines and prosecution if standards and procedures aren’t met.
New licensing rules for HMOs
In Peterborough, additional licensing responsibilities also now apply for HMO landlords operating properties with three to four tenants. The licensing rules changed in January 2026, leaving non-compliant landlords facing prosecution or fines of up to £30,000.
Increased property income tax from 2027
When budgeting and setting rental prices, landlords will need to factor in the impact of the 2% rise to income tax rates on their property income, which will be applied from April 2027. This is also important with the change to the rental increase process as part of the Renters’ Rights Act.
Predicted rental increases
Another significant factor is obviously rental increases themselves, since this ultimately impacts rental yields. Rent growth is moderating, with most experts predicting around 2% annual rental price growth over this year rather than 12% annual growth witnessed during the year to 2022, for example.
Part of the slowdown is a result of increased buying. Once fuelled by the supply/demand imbalance, improved affordability from lower mortgage rates and relaxed lending rules means that tenants are finding an easier path to owning their own home than in recent years when mortgage rates peaked.
Projected yields
Rental yields are expected to be around 5-6% in 2026 as house prices as well as rental prices continue to rise, with house price growth of 2% also expected over the year.
Greater affordability
Whether landlords choose to buy in 2026 is ultimately down to them, but the above factors must be carefully considered. However, falling buy-to-let mortgage rates mean that it’s cheaper than it has been for a long time for landlords to expand portfolios and with rental demand still high, the opportunity for a profitable rental business and healthy long-term ROI remains an attractive one.
We Can Help
At Progressive Lets, we are experts in the rental market in the Peterborough area and help landlords find and manage properties within a 50-mile radius. Get in touch to find out more.
