Landlords pay £5k extra cost for Renters’ Rights Act

The Renters’ Rights Act has cost landlords and property investors £5,000 so far, a new survey has revealed.

This median figure, which comes from a survey responded to largely by professional and therefore – most likely – property portfolio holders, nevertheless gives a good indication of the higher costs of complying with the legislation’s new requirements.

This is despite Government estimates last year that this would be much less.

Consequently, 40% of the landlords told the survey that they are prioritising lower-risk tenants as they face higher costs overall and specifically, the new eviction rules that make the eviction of troublesome tenants more costly and time consuming.

Higher costs

These views have been garnered from Handlesbanken’s latest survey of some 200 landlords and property investors. Its findings point to a rental market where affordability and access are becoming increasingly connected.

As landlords face higher operating, compliance, and upgrade costs, some are not only increasing rents but also becoming more selective about tenant risk, arrears exposure, and long-term tenancy stability.

The significant uplift in costs that landlords are facing, include higher borrowing costs, more expensive maintenance and repairs, pricier insurance, and the costs of energy efficiency upgrades.

Such higher costs have persuaded many portfolio landlords to trim their holdings, Handelsbanken claims. It says 20% of respondents revealed that they’ve sold properties due to higher costs, while 19% say they have taken properties off the rental market.

Higher costs and greater tenant rights are changing how investors think about tenant risk, affordability and long-term portfolio planning.”

In addition, almost half – at 46% – said higher costs have caused them to delay upgrades or improvement works, suggesting already tired housing stock may degrade further.

The private rented sector is not simply becoming more expensive for landlords to operate, it is becoming more selective.

“Higher costs and greater tenant rights are feeding into rent decisions, but they are also changing how professional investors think about tenant risk, affordability and long-term portfolio planning,” says James Sproule, UK Chief Economist at Handelsbanken.

“For renters, that means the challenge may not only be what they pay each month, but how competitive the market feels when trying to secure a suitable home or addition to their portfolio.

“It is important to be balanced. Higher standards and stronger tenant protections are intended to improve the rental sector over the long term. But they also come with real costs, and our research shows professional investors are already adapting their behaviour in response.”

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Author: Gemma