Surveyor analysis suggests weaker properties may face falling values and tighter lending as landlords prioritise stability and long-term income
Not all rental property will perform equally under the Renters' Rights Act. Early broker reaction has focused on the potential for more complex, advice-led business. From a valuation perspective, the changes point to a more fundamental shift already underway.
According to Andrew Peters (pictured, top right), associate director of technical services at Countrywide Surveying Services, the immediate impact is likely to be less about sudden behavioural change and more a continuation of trends already emerging across the sector.
“With the most significant elements of the Renters’ Rights Act due to come into force on 1 May, there is now limited opportunity for landlords to materially alter their behaviour in advance of implementation,” he said.
Much of the concern centres on the abolition of Section 21 and the prospect of longer, more complex possession processes, particularly where tenants fall into arrears. Peters said this could increase both the time and financial exposure involved in regaining control of a property.
A combination of regulatory change and existing cost pressures is expected to weigh on landlord margins, with restrictions on rent increases, more flexible tenancies and the ability to challenge rents all contributing to greater income uncertainty.
“As a result, buy-to-let investment is expected to become increasingly unattractive for certain cohorts, particularly accidental landlords and those who are highly leveraged,” Peters said.
That dynamic is likely to reinforce an existing trend of smaller or more marginal landlords exiting the sector, while more established investors adapt or expand. The Act may also prompt a shift in acquisition strategy.
“Business models that relied on purchasing lower-quality or compromised stock, such as properties in secondary locations affected by noise or other negative factors, may become less viable,” Peters said.
In response, landlords are likely to favour higher-quality assets that support longer-term tenancies and more stable income, reducing exposure to void periods and tenant turnover.
Over time, that shift could contribute to improved rental standards, both through new acquisitions and more proactive management of existing properties.
“By contrast, weaker assets are likely to face downward pressure on both capital and rental values,” Peters said.
That divergence is expected to feed directly into valuations and lending decisions.
“If landlord demand concentrates on higher-quality rental property this could place upward pressure on both capital values and achievable rents within that segment,” he said.
Properties with persistent rental weakness are likely to become less attractive to lenders, potentially leading to tighter criteria or reduced availability of finance. The direction of travel points towards a more professional landlord base, with greater emphasis on sustainability, compliance and asset quality.
“Portfolio assessment in this context is likely to place greater emphasis on sustainability of income, resilience to void periods, and overall compliance with evolving regulatory expectations.”
That shift is also being reflected in how brokers approach portfolio clients. Amar Dhanota (pictured, top left), director at London F-S, said the shift towards a more complex and professional landlord market is reinforcing the role of advice-led brokerage.
“I think the role of brokers will become more valuable. For us, it’s never been transactional and just sourcing a mortgage. It is about helping clients make better decisions in a market that is becoming more demanding, more professional and, in some cases, more polarised,” she said.
“The landlords who do well will likely be those who are prepared, realistic and properly advised. The investors who grow may well be the ones with stronger systems, better capital backing and a more deliberate long-term strategy.”
A period of adjustment appears likely, with smaller or highly leveraged landlords exiting while more established investors restructure portfolios, disposing of weaker-performing assets and reinvesting in those with more stable demand.
For lenders, the divide is likely to sharpen, with stronger portfolios viewed as resilient while weaker stock faces tighter scrutiny, reduced appetite and stricter criteria.
