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17/12/25 3:30 pm
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The Renters’ Rights Act is likely to raise rents and reduce choice by increasing landlord costs and risks, making home ownership a relatively more attractive option for many renters, says the mortgage lenders’ trade association.
The Intermediary Mortgage Lenders Association (IMLA) also expects a continued rise in the level of house purchase lending, up from £11 billion to £12 billion this year and to £14 billion in 2027, partly because the Act will increase churn by accelerating the departure of amateur landlords, with many of these properties likely to be bought by professional or portfolio landlords.
Its latest report explains that as most of the provisions of the Act increase either risk or cost, it’s reasonable to expect landlords to require an offsetting rise in revenues and returns. The burden of keeping up with such a large additional range of measures on top of the extensive list of regulations already in place might be a catalyst for exiting the market altogether, it adds.
The association’s previous data shows that the median rental yield for professional landlords - defined as having a portfolio of four or more rented properties - is 5%, compared to 4.5% for amateurs with up to three properties. “So, the shift to professional landlords, who are likely to better understand what represents a commercial return, that the Renters’ Rights Act is likely to accelerate, is consistent with higher rents,” says principal researcher Rob Thomas.
It also has concerns about the impact on landlords who rent out their home while working away for a year or two. “With the need to go to court to get a property back, many may conclude, as they did in the era before ASTs were introduced, that it is simpler and safer to leave a property empty. Thus, government policy is likely to result directly in a rise in the number of empty homes.”
It adds that with a shortage of social rented accommodation and the difficulty many families have accessing homeownership, demand is unlikely to shrink appreciably. “This suggests that the chronic under-supply, which can be seen in the RICS Residential Market Survey, is likely to worsen.”
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