JLL has cut its UK house price forecast for 2026 while lifting its rental growth view, reinforcing the split between a hesitant sales market and a lettings sector still supported by blocked first-time buyers.
The firm now expects UK house prices to end the year down 0.5%, having previously forecast 2% growth. At the same time, it has upgraded its rental forecast to 3.5% from 2.5%, saying fewer tenants are moving into owner-occupation and rental supply remains restricted.
House prices soften while rental growth outlook improves
JLL said the earlier forecast had assumed further base rate cuts and lower best-buy mortgage pricing by February. Instead, geopolitical tension and higher rate uncertainty have left the sales market flatter than expected.
Marcus Dixon, director of UK residential research at JLL, said the conditions needed to support meaningful house price growth this year are unlikely to materialise, even though more affordable regional markets should stay more resilient than London.
Greater London is now expected to end 2026 down 2.5%, while JLL has also turned more cautious on Prime Central London. Yet on the rental side it sees more support, with growth of 3.5% across the UK and 3% in London as fewer renters make the jump into ownership.
This follows Residential Landlord’s recent report on weaker mortgage choice keeping rental demand firmer. It also builds on our earlier analysis of mortgage strain keeping would-be buyers in the rental market, suggesting the same bottleneck is still shaping both sides of the market.
What the revised forecast means for landlords
For landlords, the headline is not just that rents may rise faster than JLL first thought. It is that the sales market still looks too weak to offer many clean exit routes, while the lettings market remains supported by buyers who cannot quite complete the move into ownership.
That matters in two ways. First, it offers some support for income where stock is well located and affordability has not already been stretched too far. Second, it makes portfolio decisions harder. A landlord thinking about selling into stronger price growth may have to wait longer, while one staying in the market may still be able to count on decent tenant demand.
The upgrade to rental growth is not a blank cheque for rent rises. JLL itself said affordability limits remain a constraint, and that should matter to landlords in areas where wages have not kept pace. But the direction of travel is still clear: a softer sales market is feeding the rental side by delaying tenant exits.
JLL’s broader UK market commentary is available through the firm’s UK residential insights hub.
Opinion
The market still looks stuck in an awkward middle ground. House prices are not falling hard enough to reset affordability, and mortgage conditions are not easing fast enough to release renters into ownership. That is exactly the sort of stalemate that keeps demand parked in the private rented sector.
