Touted as the biggest shake-up to renting in 30 years, the new law promises fairness for tenants but leaves landlords warning of unintended consequences
For mortgage brokers and buy-to-let lenders, the Renters’ Rights Act 2025 is more than a social policy milestone — it represents a structural shift in the economics of residential investment lending. The legislation reframes the balance between tenant security and landlord flexibility, demanding a fresh appraisal of portfolio risk, cash-flow assumptions, and exit strategies.
Income stability versus liquidity risk
The abolition of fixed-term tenancies means tenants may now remain indefinitely or depart on two months’ notice. For lenders accustomed to assessing income streams on the predictability of 12- or 24-month assured shorthold tenancies, this introduces a new volatility. Brokers will need to factor shorter income assurance periods and potential voids into affordability models.
However, the government argues that open-ended tenancies will deliver stability, as tenants are less likely to move if they feel secure and protected from arbitrary eviction. Yet, from the landlord’s perspective, that flexibility runs only one way. “Tenants will no longer be locked into fixed-term contracts,” notes one Midlands investor, “but as landlords, we remain locked into fixed-term mortgage repayments — often at rising rates.”
This asymmetry lies at the heart of a growing narrative among property investors that Prime Minister Keir Starmer’s government is waging what some describe as a “war on landlords.” By restricting eviction routes and tightening compliance standards while mortgage rates remain historically elevated, critics argue the reforms risk discouraging investment and shrinking rental supply.
Portfolio stress and lender exposure
Smaller landlords, in particular, may find the new rules prohibitive. With extended notice periods — four months after the first 12 months of tenancy — and more limited grounds for possession, the ability to sell or refinance a property swiftly will diminish. That may constrain liquidity just as higher capital adequacy standards and affordability tests already tighten lending conditions.
A recent National Residential Landlords Association (NRLA) poll found more than three-quarters of landlords were “concerned or very concerned” about the reforms. Some are considering offloading part of their portfolios, a move that could cool transaction volumes and soften valuations across the buy-to-let sector.
Compliance and cost inflation
The extension of the Decent Homes Standard and Awaab’s Law into the private sector introduces mandatory remediation deadlines for hazards such as mould and damp. Lenders and brokers must ensure borrowers have provisioned for higher maintenance and compliance costs — particularly those with older or energy-inefficient stock. These obligations, though laudable in intent, will compress margins and heighten default sensitivity if rents cannot adjust in line with costs.
Practical caution among landlords
As Mary Davis, a London based landlord, told Mortgage Introducer: “I’m selling my inventment properties. With fixed-terms gone and tougher possession grounds, the risk profile has shifted. I now factor in six-to-eight weeks’ void risk rather than three, with accredited landlord fees & Tax hikes its become risky and better returns can be made else where.”
Her remarks echo a wider recalibration in landlord sentiment — cautious, analytical, and increasingly selective.
A delicate balancing act
For mortgage professionals, the Renters’ Rights Act may enhance tenant protection, but it introduces new systemic risks for lenders. Cash-flow modelling, stress-testing, and portfolio diversification will become more critical than ever.
The government’s ambition to create “a fairer rental market” is admirable, but fairness cuts both ways. As landlords shoulder rising costs and fixed borrowing commitments while tenants gain freedom to move at short notice, the question remains whether reform has tipped the scales too far — and at what cost to housing supply and financial stability.
