Renters' Rights Act compliance costs mount as landlords adapt to new rules

The Renters' Rights Act became law on 1 May 2026, and the bills are already landing. Research from Handelsbanken puts the mean compliance cost for professional landlords at £31,411 – more than six times the £5,000 median – a gap that exposes a cohort of investors facing financial pressure their peers simply are not. The opportunity for brokers, whether through a remortgage conversation or a portfolio restructure, looks compelling.

The bank's fifth annual Property Investor Report, which surveyed 200 professional property investors across Great Britain in Q1 2026, found that just 1% of respondents plan to exit the property investment sector entirely in response to the Act. However, the cost of compliance tells a more complicated story – one with direct consequences for how brokers assess affordability, portfolio restructuring, and refinancing needs.

What compliance actually costs – and why

The median spend on Renters' Rights Act compliance among surveyed landlords is £5,000. But the mean sits at £31,411 – a gap that points to a long tail of investors facing substantially higher bills. When combined with other property upgrades, the median total spend climbs to £20,000.

That gap is not random. The landlords most likely to sit at the high end of the distribution are those with older residential stock requiring significant retrofit to meet rising EPC standards, portfolio holders with HMOs where licensing, condition standards, and tenancy complexity multiply compliance requirements, and those facing or anticipating contested possession proceedings now that Section 21 has been abolished.

A landlord with a single well-maintained flat in a modern block faces a materially different compliance bill than one managing ten older terraced houses across multiple local authority areas. Brokers who understand which type of client they are dealing with – and ask the right questions at the outset – will assess affordability and serviceability far more accurately than those relying on headline averages alone.

Unlike a single fixed regulatory fee, compliance costs under the Act are largely indirect and operational, accumulating across several distinct pressure points.

The abolition of Section 21 "no-fault" evictions is among the most significant. Landlords are now restricted to Section 8 grounds to recover possession, and navigating the associated legal processes – drafting valid notices, engaging solicitors, and enduring longer court timelines – is adding meaningfully to legal expenditure for many portfolio holders.

Stricter obligations around housing conditions are also driving capital expenditure. Properties must meet the Decent Homes Standard, and with minimum Energy Performance Certificate ratings set to rise, many landlords are facing retrofit and maintenance costs that were not previously budgeted for. The Handelsbanken data reflects this: the most commonly cited cost increases over the past 12 months were maintenance and repairs (45%), insurance (41%), and energy efficiency upgrades (40%).

The shift to indefinite periodic tenancies – replacing fixed terms entirely – has additional cash flow implications. With landlords now limited to one rent increase per year, and with tenants able to challenge excessive increases at the First-tier Tribunal, the ability to adjust rents in line with local market conditions is constrained. Combined with new restrictions banning rental bidding wars and capping upfront payments at one month's rent, landlords may face extended void periods and reduced early cash flow when re-letting.

Administrative burdens have also grown. The new Housing Ombudsman Service requires formal dispute resolution protocols, and landlords must now respond to pet requests from tenants in a considered and documented way. For professional investors managing multiple properties, these requirements add meaningful time and process costs.

It is a picture that resonates strongly with brokers working at the coalface. Dan Mules, director of London-based Fitch & Fitch mortgage brokers, told Mortgage Introducer in a previous interview that landlords are currently being squeezed from multiple directions at once. "Rising interest rates, seemingly relentless change in regulation, and higher running costs are all hitting at once, and for many landlords the sums simply don't stack up like they used to," Mules said. "However, they're still expected to absorb the risk; ultimately the gap between effort and reward seems to have narrowed significantly."

Behaviour change, not just cost

Beyond the financial burden, the report reveals clear behavioural shifts in direct response to the Act. Some 59% of landlords are tightening tenant selection criteria, 56% are investing more in their properties' condition or amenities, and 44% are considering raising rents earlier than they had planned. The parts of the Act expected to have the greatest operational impact are rent increase constraints or processes, cited by 54% of respondents; tenancy structure changes, cited by 46%; and changes to eviction or possession processes, cited by 39%.

James Sproule, UK Chief Economist at Handelsbanken, noted that while a notable exodus of professional investors has yet to materialise, landlords are nonetheless adapting to a more challenging environment by implementing measures such as stricter tenant criteria and earlier rent reviews.

The apparent contradiction in the data is worth sitting with. At the same time that 56% of landlords report rising tenant arrears and 63% have already raised rents, 84% plan to expand their portfolios – up from 54% last year. What explains it? The answer, in part, is consolidation. As Mules notes, it is the smaller and accidental landlords who are selling.

Professional investors are not just surviving the regulatory pressure – they are buying the stock that exits. The Renters' Rights Act, far from killing the market, may be accelerating its professionalisation. For brokers, that shift has a direct implication: the BTL client base is getting more sophisticated, and the advice required to serve it needs to match.

Mules said the breaking point for those leaving the market is rarely a single issue. "Layer on tax changes and ongoing regulation, and that's often the moment landlords decide it's no longer worth it. It's rarely one issue – most mention it's the cumulative weight of everything hitting at once."

Josh Quinn, operations manager at Response Mortgage Services in Leeds, agreed. He previously told Mortgage Introducer that for many of his clients, the trigger is a refinance that lands at a materially higher rate than expected. "It's typically a refinance coming in at a much higher rate than expected, which then forces a proper look at the numbers alongside the ongoing regulatory changes," Quinn said.

 "For many landlords – particularly accidental landlords – it's no longer just about whether a deal works on paper, it's whether the level of risk they're taking on is still justified by the return."

For brokers advising landlords in the residential space, these shifts have a direct bearing on client conversations. A landlord investing heavily in property upgrades while deferring maintenance elsewhere – 46% said higher costs had caused them to delay upgrades – may have a materially different cashflow profile than their historical performance suggests. Quinn put it plainly: "When you combine tighter margins with reduced flexibility and more regulation, it leaves landlords – especially accidental landlords – feeling exposed in a way they haven't previously."

Brokers who keep a close eye on how buy-to-let is evolving in 2026 will be better placed to match clients with products suited to this new operating environment. As Mules put it: "Landlords don't need more friction – they need lenders who understand complex portfolios, take a pragmatic view on affordability, and can move quickly. Brokers also have a responsibility to be upfront, stress-test deals properly, challenge assumptions, and help landlords plan ahead. Those who adapt will keep clients; those who don't will lose them."

Expansion despite headwinds

Despite these pressures, the report's broader sentiment finding is striking: 84% of respondents plan to increase their portfolio over the next 12 months, up sharply from 54% in last year's survey. Among those planning to grow, 70% cited buying opportunities or valuations as the primary driver – a dramatic shift from 2025, when only 13% of portfolio-growers cited valuations as a reason to expand. Strong rental demand was cited by 58%, and financing availability by 33%.

Joy Newton, York Branch Manager at Handelsbanken, observed that experienced investors are continuing with their growth plans, increasingly leaning on trusted professionals for guidance on regulations including energy efficiency rules. Buy-to-let clients are not stepping back. They are recalibrating, and in many cases actively looking to deploy capital.

The Renters' Rights Act is not deterring professional property investors. It is raising the bar for everyone in the market – landlords, lenders, and the brokers who advise them. As Quinn put it: "The more clarity, flexibility, and practical support that's provided, the easier it is for landlords to make informed, long-term decisions." That is, in three sentences, the broker opportunity in 2026.