UK Property Market Faces Turbulent Second Half Amid Renters' Rights Act and Rising Interest Rates

The UK property market is navigating several challenges in the second half of 2026, including global conflicts affecting consumer confidence and interest rates, ongoing cost of living issues, and key measures introduced in the Renters' Rights Act (RRA).

However, landlords have proven resilient to these changes, with good rental returns still achievable. According to Zoopla, as of March 2026, the overall UK average yield is 5.8%, while some Northern cities are achieving more than an 8% yield.

The Renters' Rights Act, which has brought significant changes to the rental market in England, may lead to more landlords being penalized for breaking the law and longer times for landlords to regain possession of their properties.

Looking ahead to the rest of the year, independent forecasters predict inflation will rise from 2.8% in April to 3.5% by December, while the Bank of England forecasts inflation to peak at 3.6%. The financial markets are predicting that the Bank of England base rate may reach 4.25% in December.

Mortgage rates are likely to follow the expected rise in the base rate, with big lenders cutting rates in May but pricing being affected by general inflation expectations and the inter-bank lending rate.