The newly introduced Renters’ Rights Act will see rents rise as landlords respond to stricter regulations and compliance requirements, new research shows.
As many as 81% of landlords say the new law will also make them more selective about the potential tenants they select to rent out their properties, according to research from mortgage market specialist Pegasus Insight.
The bill, which received royal assent and became law last week, gives tenants greater rights, with the abolition of Section 21 ‘no-fault’ evictions one of the key reforms.
It also introduced indefinite leases, limited rent increases to once a year and limited advance rent payments to one month.
After Royal Assent was granted, Pegasus found that as many as 71% of landlords planned to increase rents to offset costs associated with the legislation.
Additionally, 73%, along with the 81% who said they were becoming more choosy about tenants, thought the law would have a negative impact on their rental business.
Meanwhile, 81% thought this would have a negative impact on the wider private rented sector (PRS).
Mark Long, founder and director of Pegasus Insight, 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 increasing uncertainty around evictions, they are taking preventive action to protect revenues and manage risks.
“These are rational business responses, but they risk increasing the affordability pressures that tenants already face.”
Pegasus Insight’s research also revealed a growing gap between landlords’ and tenants’ expectations. While landlords expect higher costs and reduced flexibility, tenants generally see the reforms as a win for tenants.
Added Long: “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.”