The Renters Rights Act could make renting in the UK even worse - here’s why

Many will already have received letters from their landlords informing them of the changes, including - perhaps most notably - the end to periodic tenancy contracts and the switch for all tenancies to rolling from May 1st.

The Act guarantees more security in housing for tenants and removes the ability for landlords to make unreasonable rent increases. It even contains a provision giving the tenant the right to reasonably request to keep a pet. What’s not to like?

The sting in the tail is that the new Renters Act creates a real danger of shrinking the rental market. Not only will this make it harder to find rental properties but will hasten rental increases. There’s already been some evidence of the Renters Act reshaping the market.

Some property corporations in London have been accused of evicting tenants en-masse before it comes into force - often to switch into the more lucrative provision of temporary accommodation for council housing lists. However, it’s not only incorporated landlords who are trying to work out the potential impact of the new law.

A critical cohort of private landlords will be affected too. They make up the vast majority of the landlords in the private rental sector yet will be most exposed by the changes.

A big worry is the lack of guaranteed income as stipulated by the move to rolling tenancies, which reduces private landlords’ ability to make financial plans. But a more serious consideration is that, should tenancies go awry, the Act increases the time period for regaining possession of a property following missed payments, and the abolition of Section 21 evictions means that court proceedings will be inescapable.

So many private landlords directly rely on rental income - whether that be for retirement planning or supplemental income - and the majority of landlords have smaller portfolio sizes (45% rent out one property).

The changed risk-reward ratio is there to see. The incentive to sell-up and exit the rental market increases with the introduction of the Renters Rights Act.

There are valid arguments that the Renters Act will accelerate the professionalisation of the private rental market, with more rigorous tenant checks and higher standards for property quality.

But the push for professionalisation in a market which relies on a backbone of landlords with small portfolios is fraught with risk. The increased administrative burden, and the reduced safeguards over unreliable tenants may well prompt landlords to take the easy option and sell.

Fundamentally, the Renters Rights Act is an ostensibly positive development in the property sector in terms of tenant rights. However, the radical nature of the changes it will bring about for the industry risks making letting far less appealing a proposition to private landlords - the people on which the rental sector relies for stock.

It will undoubtedly continue the trend that the rental market is seeing of Buy to Let limited companies consolidating the market as private landlords sell up, but it will also see plenty of stock taken off the rental market altogether, which in the long run will be bad news for renters.

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Ryan Etchells is the Chief Commercial Officer at Together

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