Property consultancy Knight Frank says it is raising its predictions for rent rises in the private rented sector with a warning that new regulations and shifting tax policies will drive prices up over the next two years.
It says that rents are facing fresh pressure because growing numbers of landlords are selling up before the Renters' Rights Bill becomes law.
The legislation will see student tenancies move from assured shorthold tenancies to periodic.
The Bill will also see the abolition of Section 21 'no-fault' evictions, make regaining possession more difficult and increasing the risk of voids.
Rents will rise by 4%
Knight Frank has now upgraded its rent price forecast and expects average UK rents to rise by 4% in 2025, with Greater London rents increasing by 3.5%.
Next year and in 2027, rents could grow by 3.5% in the UK, and 3% in Greater London.
The cumulative forecast for 2025-2029 is for rents to go up by 18.8% across the UK, and by 17.1% in Greater London.
Landlords selling ahead of RRB
Tom Bill, the head of UK residential research at Knight Frank, said: "The upwards pressure on rents is partly the result of landlords selling ahead of the Renters' Rights Bill, which could make regaining possession of a property more onerous and raises the risk of void periods.
"The prospect of stricter green regulations have also made landlords consider their options.
"And that was before the recent speculation around plans to charge national insurance on rental income."
He added: "The small upwards revision reflects a possible period of disruption after the Renters' Rights Bill is introduced later this year and the backdrop of renewed tax uncertainty.
"Unfortunately, 'tax uncertainty' is a phrase likely to be repeated when we revisit our forecasts after November's Budget."
Housing market growth slows
While rent price forecasts have been revised upwards, expectations for house price growth have been cut.
Knight Frank says that high levels of supply and fragile buyer sentiment have led it to reduce its UK house price forecast for 2025 to 1%, down from 3.5% earlier this year.
However, the consultancy is expecting growth of 3% next year, compared with a previous projection of 4%.
High supply and low confidence
The consultancy still expects average UK property values to rise 18.7% cumulatively between 2025 and 2029.
In Greater London, the predicted house price rise is 14.8%.
Mr Bill said: "A combination of high supply and faltering confidence means we now expect slower UK house price growth this year and in 2026.
"The low point for the UK housing market was in April, when nil rate bands for stamp duty increased and US President Donald Trump announced a series of trade tariffs, sparking short-term instability on financial markets and some of those UK growth downgrades."
Student landlords impacted by new law
The managing director of Accommodation for Students, Simon Thompson, said: "Student landlords need to be aware that the Renters' Rights Bill and EPC targets for the PRS are not just political talking points, they will shape profitability for years to come.
"The sector is facing a move to periodic tenancies with the Bill, and while higher rents may soften the blow, landlords also have the prospect of expensive EPC improvement bills."
He added: "It's interesting that Knight Frank note the growing numbers of landlords leaving the PRS, but there are still opportunities for student landlords.
"However, for those landlords wanting to enjoy capital growth with house price increases, the lowering of expected rises is food for thought - but house prices are still expected to rise over the next few years."
