Renters' Rights Act Prompts Landlords to Reconsider Property Portfolios, Goodlord Finds

The findings, contained in Goodlord's ninth annual State of the Lettings Industry report, highlight the challenges facing the private rented sector as landlords adjust to regulatory changes introduced by the Renters' Rights Act.

The research, based on responses from more than 3,000 letting agents, landlords and tenants, found that 27% of landlords were looking to reduce their holdings or had already begun doing so.

Among landlords reducing their portfolios or preparing to leave the sector, 65% identified the Renters' Rights Act as the main reason.

The results raise questions about the future availability of privately rented homes and the impact of regulatory changes on investment decisions.

More landlords reconsidering their investments

The private rented sector has experienced significant regulatory change in recent years.

Landlords have had to respond to changes affecting tenancy management, property standards, possession procedures and compliance responsibilities.

The Renters' Rights Act represents a further major change, particularly through the move away from fixed-term assured shorthold tenancies and the abolition of Section 21 no-fault evictions in England.

Goodlord's findings suggest that these changes are influencing how some landlords assess the financial and administrative demands of remaining in the sector.

For landlords with smaller portfolios, the cost of compliance, property maintenance and professional management may be particularly significant.

Why are landlords concerned?

The research points to concerns about the changing regulatory environment and the implications for managing rental properties.

The transition to periodic tenancies changes the traditional relationship between fixed-term agreements and tenancy renewals.

Landlords must also understand the new possession framework and ensure that they follow the correct statutory procedures when seeking to recover their properties.

These changes may require updated documentation, revised management processes and additional professional advice.

The financial implications also matter. Landlords must assess whether rental income remains sufficient to cover mortgage payments, maintenance, insurance, taxation and other operating costs.

For some investors, the combined effect of these pressures may make retaining certain properties less attractive.

The effect on tenant selection

Goodlord's findings also point to a potential change in how landlords assess prospective tenants.

If landlords perceive that recovering possession will become more difficult, some may place greater emphasis on affordability checks, employment stability and references before granting tenancies.

This could create additional challenges for applicants with irregular incomes, limited credit histories or non-traditional employment arrangements.

However, tenant selection must remain consistent with applicable equality and housing law. Landlords and agents should use fair, transparent and relevant assessment criteria rather than blanket exclusions.

Could portfolio reductions affect rental supply?

A reduction in the number of landlords does not automatically mean that every property leaves the rental market.

Some landlords may sell their properties to other landlords, meaning that the homes remain available to tenants under different ownership.

Others may sell to owner-occupiers, convert properties to another use where legally permitted or leave homes vacant while considering their options.

The effect on rental supply will therefore depend on what happens to properties when landlords dispose of them.

If a substantial number of homes move out of the private rented sector without being replaced by new rental investment, available accommodation could become more limited in some areas.

This would be particularly significant in locations where demand already exceeds supply.

What should landlords do?

Landlords should review their portfolios property by property rather than making decisions based solely on general industry sentiment.

Important considerations include:

• Current rental income and achievable rent at the next lawful review.

• Mortgage repayments and refinancing exposure.

• Maintenance and energy-efficiency requirements.

• Insurance, management and compliance costs.

• The legal obligations associated with the new tenancy framework.

• The property's expected long-term capital performance.

Professional advice may also help landlords understand the new possession rules and avoid procedural errors.

Implications for letting agents

Letting agents will need to support landlords through the transition by reviewing tenancy-management systems, updating documentation and ensuring staff understand the new requirements.

Agents should also communicate clearly with tenants about tenancy arrangements and the rights and responsibilities created by the legislation.

Goodlord's research suggests that the industry may need to focus not only on compliance but also on maintaining confidence among landlords who are considering whether to continue investing.

The outlook for the private rented sector

The findings arrive at a time when the government is attempting to improve tenant security while addressing the wider shortage of affordable housing.

The challenge is to ensure that stronger tenant protections do not unintentionally discourage investment in the supply of good-quality rental accommodation.

The research does not establish that the Renters' Rights Act alone will cause a reduction in rental supply. It does, however, show that a substantial proportion of surveyed landlords are reconsidering their investment positions.

The next few years will reveal whether landlords adapt to the new regulatory environment, reduce their holdings or redirect capital into other property investments.