Renting is broken. Regulation won't fix it

The Act is the most significant overhaul of the lettings sector in nearly 40 years. It promises a reset for renters, and will undoubtedly deliver some welcome changes: greater flexibility, stronger rights and, yes, more pets in homes.

But the idea that legislation alone can fix a broken rental market is a fantasy. The problems in the sector run deeper than one Act of Parliament can solve. Demand outstrips supply. Court processes are slow to the point of paralysis. And landlords - already squeezed by rising costs and a regulatory environment that grows more complex by the year - are being asked to absorb yet another seismic shift. In a market under strain, every new rule has consequences, intended and otherwise.

Take gazundering. The Act's ban on overbidding is well-intentioned: tenants shouldn't be spooked into paying over the odds in an overheated market. But that's not how markets work. If tenants can't overbid, landlords must hedge against the possibility that they'll underbid. This will result in buffer room baked into advertised prices, a distorted sense of true market value, and leave Britain's 11 million renters navigating an even more opaque system than before.

But the most concerning signal isn't about pricing. It's about supply. Goodlord’s latest research shows as many as 1 in 2 landlords plan to sell or reduce their stake in the market within 12 months. 44 per cent named regulation as their single biggest barrier to growth, whilst 82 per cent expressed concern about the legislation's impact. These figures don't paint a picture of a group adapting confidently to change. They signal a cohort standing at the starting block, wondering whether the hurdles ahead are worth jumping.

New Zealand - whose 2020 rental reforms inspired many of the Act's key changes - recently reversed its ban on no-fault evictions in an attempt to reverse a landlord exodus hitting supply levels. It is a cautionary tale worth heeding. Whilst talk of a mass landlord exit doesn't paint the full picture - we may see landlords selling to landlords, keeping supply intact - the market remains on edge. Landlords will look for higher returns to balance the uptick in risk, which means the very people this legislation is designed to protect could end up worse off.

And tenants aren’t faring much better. Their frustrations are telling in their simplicity: 1 in 2 want prompt repairs; 46 per cent find slow communication about maintenance frustrating. Just 1 in 5 feel confident in their new rights. Hopefully, this will improve as tenants become more familiar with the new regime, but in the meantime, landlords and tenants alike have lost confidence in the system. That’s not a problem legislation alone can fix.

If we want a healthier rental market, regulation has to be matched by delivery. That means faster court processes, deeper compliance support, systems that boost the tenant experience, and a serious effort to restore confidence among landlords.

It also means more homes. France, a country with the same population as the UK, has 8 million more homes, and rents are lower - typically around 30 per cent of income vs about 40 per cent in the UK. No legislation can compensate for a fundamental shortage of supply. Reform without housebuilding is rearranging deckchairs.

Even well-intentioned reform can create destabilising ripple effects. Some are already being felt; others will only emerge once landlords and tenants have spent more time operating inside the new system.

But I am optimistic. The Renters’ Rights Act is not the solution to Britain’s broken rental market, but it signals a shift whereby the industry stops talking about change and starts enacting it. This requires leadership and a willingness to face the uncomfortable truth: renting is broken and reform is possible, but it has only just begun.

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William Reeve is CEO of Goodlord, the UK's leading online platform for residential lettings professionals supporting over 1 million tenants, landlords and letting agents in the UK each year.

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