Renters Rights Act - changing the shape of the market?

While we are just weeks in to the new reforms the Renters Rights Act brings to the residential housing market and there is very little empirical evidence to go on, it’s not unreasonable for the property profession to begin to get a sense of how the new legislation might shape the private rented sector (PRS) market.

What could be termed as the ‘first flush’ of private landlords getting out of the market has already worked its way through the system in that many got ahead of the impending legislation and sold up. This has had a little bit of an effect on rents because wherever there is a squeeze on supply, there will be a rise.

How much and how far these ‘evacuated’ properties will work through to the private residential sales market and affect house prices remains to be seen. And, of course, whatever the outcome depends on the location.

It’s safe to assume that many of the first tranche of landlords to sell up ahead of the Act coming into effect in May 2026, were those with a minimal - even the minimal of one property - portfolio. This looks set to characterise any current and forthcoming trend, in the short term, as tenancy agreements proceed to their end and the point of renewal.

There shouldn’t necessarily be the assumption that the Act means landlords will, automatically, increase rents either to existing tenants wishing to renew or to new tenants. As ever, landlords will continue to strike a balance in weighing up the risk of a void period against that of retaining an existing tenant or attracting a new tenant in judging the sentiment of the market in the area.

On the tenant side, there is nothing in the Renters Right Act that makes for any change in demand. If the outcome of the Act results in a loss of individual, ‘independent’ landlords from the market, this leaves the way open for more corporate landlords to fill the vacuum.

This could completely change the shape of the PRS market in the mid-to-long term. Arguably, the traditional, independent landlord is very focused on income, with the long-term investment value of the property portfolio being a secondary concern. However, corporate interests are in a position to be less immediate income-focused and short-term, yield-driven in looking to the PRS as an asset class within a spread of investment portfolios judged and approached with a long-term view.

The affect that this might have on areas of the country - such as areas of the country that are not economically dynamic or rural areas where there may not be enough volume of demand to attract a corporate level of landlord - remains to be seen, of course.

Where there are imbalances between supply and demand, these do affect attitudes to investment and risk and, ultimately, this affects values. But however it shakes down, the Renters Rights Act is just one factor in play in an increasingly complex residential property market which, inevitably, performs against the backdrop of an economy and geopolitical factors more often than not beyond the influence of a single piece of legislation.