May 2026 saw some major changes to laws impacting property markets across England, with the Renters Rights’ Act officially coming into force and several potentially game-changing housing reforms also outlined in the government’s ‘King’s Speech’ announcements.
Headline inflation figures fell during April but concerns about future price rises remain elevated—largely due to the Iran War and its potential consequences. The Bank of England has said it will not rush to increase its base rate of interest but all UK housing markets are nonetheless readjusting to new realities and revised expectations after mortgage rates spiked in March and April.
Renters’ Rights Act
The newly introduced Renters Rights Act—now in effect throughout England—takes aim specifically at what are referred to as ‘no fault evictions,’ whereby a landlord seeks to quickly replace or otherwise evict their tenants who have done nothing fundamentally wrong or illegal to bring about that scenario.
The new laws also mean that landlords can only raise their rents once a year and can ask for no more than a single month’s rent upfront from new tenants. Property owners must also now stick to whatever rental price arrangements they initially advertise (to avoid creating bidding wars among potential tenants) and they can only refuse requests to keep pets with good reason.
King’s Speech Housing Reforms
May 2026 also saw a series of potentially very significant housing sector reform plans outlined by King Charles on behalf of Sir Keir Starmer and the UK government.
Those plans include measures that will begin to phase out ‘leasehold’ property ownership structures as a norm within the UK’s housing market. To that end, the government plans to legislate to create a new legal framework for ‘commonhold’ ownership, which should allow full freehold ownership of flats to become much more commonplace and encourage more “bespoke” approaches to communal living situations.
The reforms mean it will soon become illegal to sell newly built apartments on a leasehold basis, with commonhold to become the default ownership structure in those settings. Existing leasehold homeowners will also soon be allowed to switch to commonhold ownership structures if they wish to, while ground rent charges will be capped at £250 per year and reduced to a ‘peppercorn’ rate after 40 years.
Government is also planning to restrict eligibility for ‘Right to Buy’ schemes to limit the rate at which social housing units become privately owned, while new laws will insist that landlords and freeholders remove any unsafe cladding on their tall residential buildings as a matter of real urgency.
Inflation Figures and the Energy Price Cap
It was revealed in May that the UK’s ‘consumer price index’ (CPI) rate of inflation fell during April 2026 to 2.8 per cent, as compared to 3.3 per cent in March. However, that fall in general consumer prices was attributed in part to a reduction to the energy price cap, which Ofgem has now announced will be increased by as much as 13% from July.
Consequently, while prices fell in April, inflation looks certain to rise again in the coming months, with millions of households having to cope with notably higher energy bills in the second half of 2026. All of which is having the effect of cooling housing market activity to some degree across most parts of England and Wales.
Rates Expectations and Mortgage Deals
For the Bank of England, rising consumer prices could demand a monetary policy response involving one or more increase to the base rate of interest – despite the Bank’s governor Andrew Bailey suggesting in May that he remains keen to avoid taking any such action.
Since the Iran War began in late February, concerns about inflation have spread impactfully through economies worldwide. Despite no official movements in the BoE’s base rate in 2026, UK lenders quickly increased the interest rates on their fixed-rate mortgage deals in response to the heightened geopolitical uncertainty. Those changes left remortgaging homeowners and prospective first-time buyers among those facing the prospect of notably higher monthly mortgage payments.
In recent weeks, interest rates on most mortgage deals held steady or started to fall as circumstances internationally settled down somewhat. Nevertheless, borrowers are being warned not to be complacent and to be aware that the BoE’s base rate (and mortgage rates across the UK market) could yet be increased again as the year goes on.
Headwinds and Uncertainty
The Royal Institute of Chartered Surveyors (RICS) reported in mid-May that fears about inflation and interest rate rises have “subdued” the UK housing market and made potential buyers more cautious than they otherwise would be. Around the same time, Halifax published figures showing that the average cost of a house being sold in the UK fell by 0.1% in April to just slightly less than £300,000.
“After a strong start to the year, recent global developments have added a greater degree of uncertainty to the outlook,” noted Amanda Bryden, head of mortgages at Halifax. “In particular, higher energy prices have fed into inflation expectations, prompting markets to reassess the path for interest rates – a shift that has already pushed up borrowing costs for many buyers.”
Home Legal Direct’s Perspective
Given the unpredictability of world affairs at present and the potential for more political instability in Westminster, uncertainty looks sure to be the backdrop for the UK’s housing markets across much of 2026. However, those markets remain resilient and homebuyers, sellers, landlords and investors can all still secure good deals for themselves if they play their cards right.
Timing can be crucial in all these contexts though so it’s important to be consistently well informed so that you can act cautiously but decisively if it’s in your best interests to do so. Getting good advice from suitably qualified experts can make a real difference and help you assess whatever options you’re considering with optimism, clarity and confidence.