Prospect of a Renters’ Rights Act leading to a landlord exodus
For many landlords, the exit lights are flashing
Comment by Tom Entwistle, LandlordZONE
There’s been acres of print spilled on this topic already, and I’m guilty myself of adding to this onslaught, but it’s a momentous time and the story bears repeating.
As landlords await the day when the new Act becomes law, there’s growing evidence that some landlords are heading for the exit. The uncertainty created by the prospect of these new laws – coupled with an agonising wait for an Autumn Budget that promises to add painful new taxes – is leading to something of a mass exodus.
England’s private rented sector faces the biggest change since the introduction of the Shorthold Tenancy over 40 years ago. The Government’s Renters’ Rights Bill, which abolishes Section 21 evictions, ends fixed-term tenancies, and tightens controls over what landlords can charge in rents, will completely reshape the landlord–tenant relationship in the private rented sector (PRS).
The Bill is expected to become law, to receive Royal Assent before the end of this year and will likely be fully implemented throughout 2026 and perhaps into 2027, though the exact timeline for the implementation of specific provisions is yet unknown.
The stated aims of the Renters’ Rights Bill are to provide greater security and stability for tenants while being fair to landlords, banning “no-fault” evictions, abolishing fixed-term tenancies, and making it easier to hold landlords accountable for poor housing conditions.
It aims to protect tenants from unfair practices by restricting rent increases, banning rent bidding wars, and introducing a landlord ombudsman service, while it is claimed, fairly balancing the rights of tenants and landlords.
But recent data from respected sources including Bloomberg, Rightmove and the NRLA confirms a landlord exodus, driven by mounting tax, cost and regulatory pressures. It’s resulting in a shrinking of rental supply, rising rents, and deepening uncertainty about the shape the housing market will take in the future.
For landlords, the message is clear: you need to decide whether you leave or stay. If you stay you must adapt fast and professionalise your operations, you must prepare for a tougher, more regulated era or risk being driven out of business by default.
Security of tenure
A key feature of the Renters Rights Bill is the enhanced security of tenure it gives tenants. The bill will remove “no-fault” evictions, which currently allow landlords to terminate a tenancy without giving a specific reason and without a court appearance. Under the new legislation, landlords will be required to provide sufficient evidence to convince a judge they have a valid reason for ending a tenancy. This means a breach of the lease must have occurred under an expanded set of grounds, with the landlord using the Section 8 process.
From a landlord’s point of view, the change means that the possibility of eviction will become more limited. The process is likely to take even longer than it does today under Section 21 – usually up to 9 months – which makes many landlords nervous. For small-scale landlords with just one or two rentals, the risk of financial distress is greater that it is for a portfolio landlord with many properties.
Hence the Bill will have a greater impact on the small-scale landlord – those owning by far the greater proportion of rental properties in England – than it will on the portfolio landlord. They can spread the risk over many more properties, and it is far more than likely they will be operating with the tax advantages of a limited company.
According to the English Private Landlord Survey (2024), 45 per cent of landlords owned one rental property, representing 21 per cent of all tenancies. A further 38 per cent owned between two and four rental properties, representing 30 per cent of all tenancies in England. 17 per cent of landlords owned five or more properties each, representing 49 per cent of tenancies, while the proportion of female landlords (50 per cent) has increased since 2021 (44 per cent). However, landlords with five or more properties were more likely to be male (63 per cent).
Rents
The legislation will allow tenants to challenge agreed rents within the first six months of a tenancy or contest any new rent increase proposed by a landlord. Agents and landlords have warned the government to no avail that giving tenants wider rights to appeal rent increases could effectively cap prices, discourage more investment in buy-to-let and prompt more landlords to sell.
The National Residential Landlords Association (NRLA) has raised concerns that the tribunal system to be used for hearing rent challenges lacks the resources it needs to adequately handle an anticipated surge in cases. The NRLA’s policy chief, Chris Norris, has said the system “does not have the resources, or capacity, to properly consider and decide upon cases in anything like a reasonable time frame”. Norris warns that delays could amount to “de facto rent controls” if the measures in the Bill are left unaddressed.
The Bill will also require landlords to give at least two months’ notice of rent increases, and it bans any rise during the first 52 weeks of a tenancy. Daniel Smith, a senior associate at law firm Gardner Leader, has noted that landlords “will no longer be able to rely upon [existing lease] provisions”, meaning rent changes must now be issued through formal Section 13 notice procedures
Fear of the unknown
Currently available market data is already pointing to growing caution among the landlord fraternity. A JLL survey found that 50 per cent of landlords have postponed plans to expand their portfolios amid the uncertainty, while Simply Business has reported that 39 per cent are considering leaving the market entirely within the next 12 months. The mortgage provider added that this reflected a “sense of trepidation” among property owners who doubt the reforms will raise standards as intended by the government.
Mortgage brokers are warning of the unintended consequences for the lending industry and tenancy structures. Kessar Salimi, of Freedom Financial, has said that: “Although it will deter some landlords and reduce housing supply, all that will do is increase rents due to higher demand for existing properties.”
While ministers are arguing that the Renters’ Rights Bill needs to rebalance the market more in favour of tenants, for the mortgage market the impact could be significant. Brokers expect stronger demand for short-term and remortgage products as landlords reassess portfolios and adapt to a more tightly controlled environment.
Energy efficiency measures
A major factor helping some landlords to decide to leave the PRS has been the prospect of having to bring their rental properties up to a standard that meets the latest stringent EPC rating. Currently, private landlords in England and Wales must ensure their rental properties have an Energy Performance Certificate (EPC) rating of E or higher unless they have a valid exemption.
The government is proposing to raise this standard to a minimum rating of C by 2030, with new tenancies needing to meet the C standard by 2028. Landlords are responsible for obtaining an EPC, providing it to new tenants, and making necessary improvements to meet the standards. This process is likely to cause severe difficulties in getting work done, for some landlords, when their properties are already tenanted, and it could cost them anything up to a proposed government refurb cap of £15,000.
Strong evidence of landlords leaving
For the reasons stated there are record levels of former rental homes for sale. The proportion of former rental properties moving into the sales market over the last 12 months is at its highest on record, indicating that more landlords are selling up.
According to information provided by Rightmove, last October 18 per cent of properties for sale were previously on the rental market. That figure compares to just 8 per cent in 2010. The hotspot for this trend is London, where nearly a third (29 per cent) of homes for sale were previously for rent, followed by Scotland (19 per cent) and the North East (19 per cent).
The previous five-year average for homes moving from the rental to sales market in Great Britain is 14 per cent, suggesting that this isn’t a sudden exodus of landlords, more like a steady stream, but the number of new properties coming to the market for sale is now 14% ahead of last year.
Tim Bannister, Rightmove’s property expert, had said last year:
“In recent years it has become more attractive for some landlords to leave the rental sector rather than to continue to invest in it, due to rising costs, taxes, and legislation. A healthy private rented sector needs landlord investment to provide tenants with a good choice of homes. We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.”
Despite those leavers there doesn’t yet appear to be a mass exodus, and from Rightmove’s viewpoint, ex-rental homes can provide opportunities for first-time buyers while others may be purchased by expanding portfolio landlords, to bring them back into the rental market.
Landlords need incentives to stay
Rightmove has suggested, like others, that there needs to be incentives for landlords to stay in the PRS and continue to invest in the sector to provide a healthy market for tenants. But all the evidence shows a considerable increase in rentals on the sales market, suggesting more landlords are selling up.
In other reports the Ministry of Housing, Communities and Local Government has revealed that between April and June 2025, 6,700 households in the private rented sector in England qualified for help from their council to prevent homelessness after their landlord decided to sell the property.
The latest available possession figures from the Ministry of Justice (MoJ) released in February demonstrate a telling upward drift in possession claims ahead of the new Bill. Some landlords are racing to secure possession of their properties before Section 21 goes. The data confirms a dramatic rise in court claims, with 32,287 Section 21 notices filed in 2024, the highest number in eight years.
The NRLA has said they don’t believe this trend is entirely down to the Renters’ Rights Bill, but “part of a broader trend of landlords losing faith in the system.” More a combination of tax changes, higher interest rates, and costly regulation which combined have “already pushed many landlords to the brink.”
One of the other significant trends evident from the 2024 MoJ figures is the record-breaking 29,303 Section 8 possession claims, which arguably marks a shift in landlord strategy. Historically, many landlords preferred to issue a no-fault Section 21 notice to remove problem tenants, often choosing to absorb unpaid rent as a loss to avoid the costly and lengthy court process.
A shift in the politics of renting
The Renters’ Rights Bill reflects the politics of the day, with governments across the UK seeking to change the balance in power in the landlord-tenant relationship – governments court renters, now the largest voting bloc in the housing market.
England’s private rented sector now houses nearly 20 per cent of households. Undermining its economics risks deepening the housing crisis, it creates a housing shortage for tenants and an increasing amount of homelessness. It’s forcing councils to spend more and more money on temporary accommodation. The Government insists the reforms will “professionalise” the sector. The risk is that it simply shrinks it.
In summary
The Renters’ Rights Bill is being sold as a step toward fairness – and in principle, that’s hard to oppose, not all the measures in the Bill are opposed by landlords. Few landlords want bad practice in the sector. But legislation that removes the longstanding Shorthold Tenancy piles complexity, cost and uncertainty on to legitimate landlords and risks doing more harm than good.
The private rented sector in England is at a crossroads. There has been an exodus so far, let’s hope this Bill does not turn it into a flood. An exodus is bad news for landlords — and even worse news for tenants who need a place to live.
Landlords have two choices: adapt and professionalise or step aside and sell. Either way, the English private rented sector landscape takes on a radical new shape
