The newly enacted Renters’ Rights Act will drive rents higher as landlords respond to tougher regulation and greater compliance demands, Pegasus Insight research reveals.
The act, which received Royal Assent on 28 October, abolishes Section 21 ‘no-fault’ evictions, introduces open-ended tenancies, limits rent increases to once per year and caps advance rent payments at one month.
The latest landlord trends report from Pegasus found that 81% of landlords expect the legislation to make them more selective about prospective tenants and 71% say they plan to raise rents to absorb new costs and restrictions.
Meanwhile, 73% of landlords believe the act will have a negative impact on their own lettings activity and 81% think it will negatively impact the wider Private Rented Sector (PRS).
The research also highlights a growing disconnect between landlord and tenant expectations.
While landlords anticipate higher costs and reduced flexibility, tenants tend to see the reforms as a win for renters.
Pegasus Insight founder and managing director Mark Long says: “The Renters’ Rights Act marks one of the most significant shifts in the private rented sector in decades, and many landlords are preparing cautiously.”
“Faced with stricter limits on rent reviews and growing uncertainty around evictions, they’re acting pre-emptively to protect income and manage risk. These are rational business responses, but they risk compounding the affordability pressures tenants are already facing.”
“Our recent Tenant Trends research found that almost half of renters believe the Renters’ Rights Act will benefit them, largely due to stronger protections and limits on rent rises.”
“But the corresponding Landlord Trends data tells another story: four in five landlords say they’ll be more choosy about who they let to, and two-thirds intend to raise rents in response to the new rules.”
“This mismatch between perception and reality underlines how complex PRS reform can be: policies designed to protect tenants could, unintentionally, make it harder for them to find and afford a home.”
After passing Royal Assent, landlord bodies and buy-to-let lenders called for six months’ grace before the legislation is implemented, adding that its measures should “work for both tenants and responsible landlords”.
