The newly introduced Renters’ Rights Act will see rents rise as landlords respond to stricter regulations and compliance requirements, according to research from Pegasus Insight.
The act, which received royal assent on October 28abolishes no-fault evictions under Article 21, introduces indefinite leases, limits rent increases to once a year and limits advance payments to one month.
Pegasus’ latest landlord trends report shows that 81% of landlords expect the legislation to make them more selective of potential tenants and 71% say they plan to increase rents to accommodate new costs and restrictions.
Meanwhile, 73% of landlords believe the law will have a negative impact on their own rental activities and 81% believe it will have a negative impact on the wider private rental sector (PRS).
The research also points to a growing gap between the expectations of landlords and tenants.
While landlords expect higher costs and reduced flexibility, tenants generally see the reforms as a win for tenants.
Pegasus Insight founder and chief executive Mark Long said: “The Renters’ Rights Act marks one of the most significant shifts in the private rental sector in decades, and many landlords are preparing cautiously.”
“Faced with stricter limits on rent reviews and growing uncertainty around evictions, they are acting pre-emptively to protect incomes and manage risk. These are rational business responses, but they risk increasing the affordability pressures that tenants already face.”
“Our recent Tenant Trends survey found that nearly half of renters believe the Renters’ Rights Act will benefit them, largely due to stronger protections and limits on rent increases.”
“But corresponding data from Landlord Trends tells a different story: four in five landlords say they will be more choosy about who they rent to, and two-thirds plan to increase rents in response to the new rules.”
“This discrepancy between perception and reality underlines how complex PRS reforms can be: policies designed to protect renters could inadvertently make it harder for them to find and afford housing.”
After passing royal assent, landlords and buy-to-let lenders asked for a six-month extension before the legislation is implemented, adding that the measures “must work for both tenants and responsible landlords”.