The latest survey from the Royal Institution of Chartered Surveyors (RICS) highlights ongoing rent rises because of rented property shortages - even though tenant demand is easing.
Its December figures show that surveyor confidence in renter demand for homes is slipping again, posting a net balance of -27%.
However, the confidence levels for fresh landlord listings remain firmly in reverse at -39%.
It's this imbalance, RICS warns, that will continue to push rents up.
To underline the impact, the organisation is predicting average rent rises of 3% this year
Landlords sell up
Tom Bill, the head of UK residential research at Knight Frank, told Accommodation for Students: "Tenant demand has been relatively strong in the lettings market following the Budget and the clarity it brought.
"However, supply is still under pressure as more landlords sell up due to the proliferation of red tape and taxes in recent years.
"The big test in 2026 will be the Renters' Rights Act, with some prospective landlords sitting on their hands to watch how it plays out and whether the court system becomes overwhelmed."
He added: "As supply comes under pressure, it means upwards pressure on rents will persist, which is exactly the sort of unintended consequence that governments worry about when they design new legislation."
The wider housing market
Beyond the PRS, RICS says the wider housing picture remains subdued but less fragile than it did at the end of 2025.
Buyer interest and completed deals stayed negative in December, registering -24% and -19% respectively.
Both of those indicators have edged higher month on month, reflecting surveyors’ belief that the housing market slowdown is losing pace.
To underline that belief, expectations for transactions over the next quarter climbed to +22%, the most upbeat result since October 2024.
Sales picking up
Looking further ahead, the 12-month projections have strengthened with +34% anticipating higher sales volumes, more than double November's level.
Respondents linked the improving mood to the removal of the pre-Budget uncertainty and growing confidence around more interest rate reductions this year.
The supply of homes for sale also showed signs of levelling out, though new vendor instructions settled at a net balance of 0%.
However, surveyors caution that appraisal levels remain low which means any meaningful increase in stock will emerge only gradually.
House prices still falling
The survey also found that house prices nationally are still falling, with a net balance of -14%, although the rate of decline is slowing.
The regional price differences remain pronounced with London and the South East continuing to see bigger falls at -42% and -32%.
Scotland and Northern Ireland have maintained positive momentum and short-term predictions of a rise have moved close to flat.
Despite that, +35% of surveyors now expect prices to rise over the next year, the most optimistic they have been since late 2024.
Catalyst for buyer demand
The head of market research and analysis at RICS, Tarrant Parsons, said: "The UK residential market remains in a prolonged soft patch, with December's survey recording a sixth consecutive month of negative momentum in buyer enquiries.
"That said, there are tentative signs of a shift in sentiment beneath the surface."
He adds: "Near-term sales expectations have strengthened, and the 12-month outlook has edged into more positive territory.
"The key test for 2026 will be whether borrowing costs ease on a sustained basis.
"If so, this could provide the catalyst needed to drive a recovery in buyer demand."
Knight Frank's Tom Bill added: "The renewed confidence seen in recent weeks underlines the rule that the less a government intervenes in the housing market, the closer it operates to full capacity.
"For now, the absence of bad news means that some of the demand that became pent up last year is being released and we expect UK prices to grow by 3% this year."
Student accommodation supply
The managing director of Accommodation for Students, Simon Thompson, said: "The RICS' survey shows that while housing supply remains tight, tenant demand is no longer accelerating at the same pace, but rents will go up.
"Student landlords in many university towns and cities will find that's a dynamic which will be magnified where student tenant turnover is high, and accommodation supply is falling."
He added: "It also looks like there is growing confidence in the private rented sector but there's a lot to consider in the coming months.
"The introduction of the Renters' Rights Act may well see sentiment being affected and the RICS' survey later this year might highlight growing issues in the PRS."
