New analysis suggests regulatory change could support a more stable and structured private rented sector despite rising costs for landlords.
The forthcoming Renters’ Rights Act could ultimately benefit professional landlords, even as it introduces additional costs and complexity, according to new analysis from property management specialist Rushbrook & Rathbone.
The firm’s latest insight indicates that the private rented sector has remained relatively resilient despite sustained regulatory pressure, with signs of improving tenant stability and modest income growth.
Average rental income per property has risen from £9,860 to £11,352 on an annual basis, while average yields have edged up from 6.3% to 6.4%. At the same time, the proportion of landlords reporting rental arrears has fallen from 29% to 27%.
However, the data also points to a shift in landlord behaviour. Average portfolio sizes have declined from 7.3 to 6.6 properties, with more landlords choosing to sell assets rather than expand holdings.
This trend reflects the increasing operational and compliance burden facing landlords, driven by both existing regulation and further changes expected under the Renters’ Rights Act.
STRUCTURAL CHANGES TO THE SECTOR
Rushbrook & Rathbone suggests that, while widely viewed as a challenge, the legislation could create a more structured operating environment that favours well-managed portfolios.
The abolition of Section 21 ‘no-fault’ evictions will be accompanied by clearer possession grounds under Section 8, providing a more evidence-based framework for regaining control of properties in cases such as arrears or anti-social behaviour.
The move to periodic tenancies is also expected to reduce tenant turnover and administrative burden, potentially supporting longer tenancies and more predictable income streams.
Changes to notice periods, requiring tenants to typically give two months’ notice, may improve landlords’ ability to plan and reduce void periods across portfolios.
Meanwhile, the introduction of a property ombudsman is expected to streamline dispute resolution, reducing reliance on the courts and lowering associated costs and delays.
The creation of a national landlord database and increased compliance requirements are also likely to raise standards across the sector, potentially reducing the presence of non-compliant operators.
PROFESSIONALISATION TO ACCELERATE
Roma Sharma, managing director at Rushbrook & Rathbone, says: “While the Renters’ Rights Act is understandably being viewed as a challenge by many landlords, it also represents a shift towards a more structured and professional rental market – in theory.
“What we are likely to see is a widening gap between those landlords who are well prepared, well managed and fully compliant, and those who are not.
“For professional landlords, greater clarity around possession, improved dispute resolution, and a more transparent regulatory framework can actually provide a more stable operating environment over the long term.
“At the same time, the increased complexity of the sector means that managing property is becoming far more operational and compliance-driven than it has been in the past.
“As a result, professional management is no longer simply about convenience, it is increasingly about ensuring that landlords remain compliant, protect their income, and are able to operate effectively within a rapidly evolving regulatory landscape.”
The findings point to a sector in transition, where tightening regulation may accelerate the shift towards professionalisation, even as some smaller landlords continue to exit the market.
