UK Living Roundup September 2026

2026 marks the 30th anniversary of the buy-to-let mortgage, with changes to borrowing rules that opened the door to a period of extraordinary growth for the private rented sector.

Since 1996, the number of households renting privately across England has risen by more than 150 per cent, compared to just 14 per cent across other tenures—a remarkable transformation in Britain's housing landscape. Putting that into numbers, that's the equivalent of an additional 277 privately rented homes per day over the last thirty years – higher than the 258 owner-occupied homes added over the same period and the 20 homes per day lost from the social housing sector.

While the popularity of buy-to-let amongst smaller investors has waned in recent years as costs have risen, reliefs have been withdrawn and government appetites have changed, it has played a vital role in the tenure shift we've seen over recent decades.

Individual investors are still buying; there are just fewer of them. In the second quarter 8 per cent of gross mortgage advances were for buy-to-let loans. This equates to lending of £12.4 billion so far this year, compared with £22.2 billion a decade ago when up to a fifth of total lending was for buy-to-let. Build-to-rent has been fundamental in filling that gap, with £3 billion invested so far this year, up from less than a billion in the first half of 2016.

A decade ago, investment in build-to-rent was just 4 per cent of total buy-to-let lending. Fast forward to the first half of 2026 and build-to-rent investment was equivalent to almost a quarter (24 per cent) of buy-to-let lending, demonstrating the importance of the institutional investor in providing new rental stock into what remains an undersupplied market.

This is evident too when we look at activity across the London new homes market. Analysis from Molior London suggests fewer than 900 new homes were bought by individuals in Q2 compared with more than double the number of sales to companies. Build-to-rent sales in H1 accounted for 41 per cent of deals, up from 30 per cent five years ago and just over a fifth back in 2016.

For anyone watching the housing market, the divergence between the rental and sales markets has become impossible to ignore. With swaps and mortgage rates remaining elevated the cost of mortgage is rising. Moneyfacts figures show average rates on two-year fixes at 5.77 per cent, the highest since May, and five-year fixed rates reaching 5.83 per cent, a level not seen since November 2023.

With fewer able or willing to buy, demand for rental properties is outpacing sales, with the RICS monthly survey reporting eight consecutive months of growth in tenant demand, whereas new buyer enquiries have been in negative territory every month bar one since the end of 2024.

Average rents across the UK rose by 3.8 per cent in the twelve months to August, the highest annual increase so far this year. All regional markets except the South East saw rents rise at above-inflation rates, with the North East and North West both recording the highest annual increase at 5.8 per cent. But in the sales market, just two regions (North East and North West) saw above-inflation increases. Nationally, prices rose 1.4 per cent, with London and the South West both seeing price falls of -3.3 per cent and -0.2 per cent respectively.

Higher mortgage costs mean that in more expensive markets the difference in cost between buying and renting a home is increasing. In London, where almost a third of homes are rented privately, it would cost on average 9 per cent more to buy a home rather than rent, based on average values. This compares with the period pre-2022 when buying a home with a 75 per cent loan-to-value mortgage was broadly the same cost as renting.

That's the monthly cost. But the barrier isn't only the mortgage payment. The average deposit for those looking to put down 25 per cent would be almost £139,000, the equivalent of saving more than five years' rent. Even at a 10 per cent deposit, prospective buyers would need to save the equivalent of two years' rent. While some buyers could in theory bridge the monthly cost gap, the ability to save a deposit remains the more significant barrier.

But perhaps the most striking opportunity for private rental growth lies in a market that's been largely overlooked. Our recently released report on UK seniors housing highlights a considerable gap in the provision for renters – and an opportunity for the private rented sector to expand into a market that's been dominated by social housing and to a lesser extent owner-occupation.

Social renting accounts for close to three out of every four units in the seniors housing sector. The provision rate of owner-occupied and privately rented homes is just 3 per cent, and they're concentrated in wealthier areas. But whereas 19 per cent of all housing is privately rented, in the seniors housing market it’s just half a per cent.

Although it's a small part of the market, it is an area of growth. The number of units in schemes with market rent or ownership as a main tenure has grown 58 per cent over the last twenty years – well above the overall rate of growth in the sector – accounting for just over half of new schemes delivered in that time.

That rise has been driven by growing occupier demand: more people wanting to rent for the speed and convenience it offers, coupled with a growing proportion of older people renting before entering the seniors housing sector. At the same time, lower house price growth in recent years means there's less fear of missing out on substantial equity gains from owning for as long as possible.

All of which points to an opportunity. As the population ages and preferences shift, the privately rented retirement sector looks set to be one of the most compelling sectors of the housing market in the years ahead.