The Renters’ Rights Act (RRA) marks the single biggest change in the regulation of the private rented sector since the Housing Act 1988. It finally became law on the 1st May this year, doing away with the Assured Shorthold Tenancy, banning bidding wars and introducing a more structured rent review system for most residential lettings under £100,000 per annum.

The press was awash with stories of a potential exodus of landlords. Prior to implementation of the RRA, we had already seen an increase in stock on the sales market and a corresponding fall in properties available to let, prompted by changes in taxation and increased mortgage costs, as well as the impending change in rental regulation. But our survey of over 230 landlords of prime properties suggests that to date only 11% of such investors have disposed of a property, the vast majority of whom have reduced the size of their portfolio, rather than selling out completely.

In part, this reflects the current weakness in the sales market and pressure on prime property prices. Because of this, we have seen properties boomerang between being marketed for the sales and to let. Under the new legislation that is going to become more difficult.

Where a landlord serves notice because of an intention to sell, they will not be able to relet the property for 12 months. So, it stands to reason they will only do so when they are committed to a sale. And it seems likely that they will be more inclined to do that when they have the best chance of achieving their price expectations in stronger market conditions.

This explains why, given prevailing market conditions, landlords are over twice as likely to consider a sale of their property over the next two years as over the next six months.

In addition, 62% of our respondents said they have become significantly less likely to buy another property. These factors, combined with the prospect that (in due course) accidental landlords become thinner on the ground, are going to progressively put a squeeze on rental supply.

That may take longer to play out than many anticipated. But it is still likely to underpin market rental values, evidence of which is going to become increasingly valuable to those seeking an increase at rent review.

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Understanding the Renters’ Rights Act

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