Could the Renters' Rights Act cause a landlord exodus in Britain?

While renters may be about to rejoice at upcoming laws coming into effect in the UK, landlords are understandably more uneasy about the future.

In the mortgage industry, feelings towards these changes have been mixed, with many concerned that the reforms ultimately bundle all landlords together in an effort to protect renters from “rogue” operators who would exploit the current system.

One of the biggest talking points from the new legislation, which is set to come into effect on May 1, is that landlords will no longer be able to issue Section 21 eviction notices. To renters, the idea that landlords cannot push no-fault evictions anymore is ideal, but the new act could make things too inflexible for some landlords, causing a major headache.

Gerard Boon, managing director of Boon Brokers, told Mortgage Introducer many landlords have fears around potentially being stuck with difficult tenants. “From my conversations with landlords, their biggest worry is regarding evicting ‘problem tenants’ and the prospect of facing lengthy tribunal claims,” he said. “Since no fault evictions have been abolished with the new bill, it's going to be far tougher to remove tenants.”

According to the Ministry of Housing, Communities and Local Government, if a landlord wishes to evict a property’s tenants, they will need to have a legal reason to do so. Some of those reasons include not paying rent on time, committing antisocial behaviour in or near the property, or not caring properly for the property.

Boon also said the legislation may not be as beneficial as some renters assume. Landlords may not put in place stricter measures to vet tenants before occupancy, he said, and said that could have an especially negative impact on younger renters.

“My concern is for younger tenants who do not have a history of paying their rent on time and generally showing good character,” he said. “Landlords may decline first-time renters for this reason.”

Landlords are also concerned about how evicting tenants – even if they have met the criteria for an eviction – will work in practice.

Those issues were raised by Matthew Arena of The Brilliant Group, who told MI that while the legislation is a step in the right direction against unjust landlords, the details remain “messy.”

He also flagged the “unintended consequences” that could emerge. “For landlords, we [still have to] find out how the system will deal with non-paying tenants in practice, rather than in theory,” he said.

Opponents of the legislation also fear its inflexibility will result in a mass exodus of landlords who want to avoid teething pains in the early days of the new rules.

Mortgage lender Pepper Money has said there could be 220,000 fewer homes available to rent across the country by the end of 2026 – a decline of about 5% in rental housing supply.

For the landlords looking to stick it out, Boon said they will have to adapt in three major areas to mitigate these new issues: firstly becoming more professional regarding compliance oversight and documentation.

“This is a major change for ‘casual’ or accidental landlords who viewed their rental properties as a stream of passive income requiring minimal effort to maintain,” he said.

Secondly, “following the abolishment of ASTs, they will need to take a longer-term view of the rental market,” he said. “Landlords no longer enjoy short-term flexibility to change tenancies at their discretion.”

The last change landlords will need to make is adapting to the increased management cost of running their properties to remain compliant. “I expect many to turn to letting agencies to facilitate this,” Boon said.