Renters’ Rights Act: Opportunities for property investors and corporates?

“The falling level of rental stock in the UK indicates there may be an opportunity for landlords who remain invested in the sector. While the end of fixed-term contracts could mean rental income seems less reliable, the length of some tenancies might increase if occupants seek long-term stability.

At a time when some private landlords are exiting the market, we have been asked to help property entrepreneurs purchase additional units using buy-to-let mortgages. Typically, these individuals have administrative support to handle increased regulation and have spread their risk across multiple units.”

“Both the decline in number of small-scale private landlords, and the renewed focus on high quality accommodation, favour large-scale developers. It is therefore unsurprising that institutional investors tell us they will maintain their investment in the build-to-rent sector. We are expecting an increase in the provision of accommodation that suits both short and long-term occupiers. Co-living is emerging to suit the needs of the more transitory occupier, while single-family housing offers longer term family homes.
In all cases, rental returns need to be considered carefully, given median rent data* shows that affordability pressures may have constrained rental growth in London over the last two years.”

“The Renters’ Rights Act is the latest change shaping the operating environment for property agents and management companies. As with most regulatory shifts, larger and better-capitalised firms are more likely to absorb the cost of compliance, while smaller or weaker operators may struggle and exit the market. This could drive further consolidation – particularly in lettings, where a small number of providers account for most breaches – and result in a more professional and stable sector. Over the longer term, rents could move higher as costs are passed on.
Industry feedback suggests the Act is not a major driver of corporate strategy, as much of its impact is already reflected in existing plans. Instead, it reinforces a longer-term trend to diversify by offering ancillary services alongside lettings management. This is an area we continue to help our clients to explore.”