Landlords across the UK are facing an estimated £5,000 compliance cost burden under the Renters' Rights Act, a figure significantly higher than initial government estimates. A recent survey of 200 property investors found that nearly half (46%) have been forced to delay essential upgrade or improvement works on their properties due to cost pressures.
The increased costs are driving fundamental changes in landlord behaviour and the rental market. Nearly four in ten landlords (40%) are now prioritising lower-risk tenants, while a fifth (20%) have opted to sell properties outright, citing the heightened expenses as the main reason.
Financial pressures from soaring borrowing costs, expensive maintenance and repairs, insurance premiums, and energy efficiency upgrades are also prompting significant adjustments to property portfolios. Of those surveyed, 19% have removed entire properties from the rental market due to these challenges.
The survey suggests that the financial strain is having a ripple effect across the sector, with concerns raised about the long-term condition and standards of rental accommodation. Handelsbanken's James Sproule highlighted that the implications extend beyond simple rent prices: "Higher costs are feeding into rent decisions, but they're also changing how professional investors think about tenant risk, affordability and long-term portfolio planning."
The findings point to a shift in rental market dynamics, with affordability and access becoming increasingly intertwined. As landlords adapt their strategies, the availability of affordable rental properties could become an even more pressing issue for prospective tenants.