The UK rental market forecast 2026 rests on a simple imbalance, according to CBRE’s Midyear Review: rental demand is set to rise in the second half while the supply of new rental homes is being squeezed from every direction
CBRE forecasts living investment volumes to rise 4.1 per cent year on year to £13.1bn in 2026. Living was one of only two sectors, alongside offices, to grow H1 volumes, up 7 per cent on the same period last year.
But the firm warns that the lack of funding deals over the past 18 months will leave the supply of new rental housing “extremely constrained” in the medium term. Multifamily delivery is expected to average just under 11,000 homes per year across 2027 and 2028, some 22 per cent below the previous five year average.
Big capital returns for stabilised assets
Institutional money has concentrated on income producing stock rather than development. CBRE highlights L&Q’s £1bn sale of its private rental business, a portfolio of more than 3,000 London homes, and Greystar’s £500m acquisition of a 904 home portfolio at Elephant Park.
In student accommodation, H1 volumes were dominated by Unite’s acquisition of the Empiric Student Property portfolio, weighted towards Russell Group university markets. Record university acceptances in 2025/26 and strong early application data for 2026/27 point to sustained demand, CBRE says.
Forward funding, by contrast, has become harder to execute as the pause in the rate cutting cycle prolongs viability pressures. Activity is instead flowing through joint ventures, refurbishment and value add strategies, a shift consistent with the rising tide of build to rent investment forecast for 2026.
The Renters’ Rights Act is thinning private supply
CBRE reports that the Renters’ Rights Act has had minimal direct impact on institutional operators, who were broadly compliant before the new rules for landlords took effect.
The indirect effect is another matter. Private landlords have continued to sell buy to let and HMO properties, reducing supply from the private rental market, according to the report. The NRLA’s guide to the Renters’ Rights Act sets out the obligations driving some smaller operators to exit.
For those staying in the market, compliance is now a competitive advantage, and landlords are being urged to adopt lifecycle evidence as the Act reshapes the rental market.
Regulation and public money offer partial relief
There has been movement on the blockages. Between April and June the Building Safety Regulator approved 89 per cent of Gateway 2 applications, up from 61 per cent in the preceding three months, though the median approval time remains 22 weeks, CBRE notes.
April also saw the launch of Homes England’s National Housing Bank, and both Homes England and the Greater London Authority have announced large scale programmes to support housing delivery. CBRE argues public investment can close viability gaps and unlock delivery, but cautions that elevated debt and build costs still hamper the pipeline.
What this means for investors
Every force in this report pushes the same way: fewer new rental homes, more renters. Higher mortgage rates are keeping would be buyers in the rental market just as private landlord sales and a stalled development pipeline shrink supply.
CBRE expects these dynamics to deliver robust rental growth, a firmer footing than the modest 2 per cent rise Rightmove forecast for rents in 2026. For investors holding stabilised, compliant rental stock, scarcity is doing the work. The window to acquire before the 2027 to 2028 supply trough may prove to be the half year’s most valuable signal.
