"One year on from the Renters' Rights Act becoming law, we are beginning to understand how landlords have responded to the changes."
- Rob Stanton - Landbay
53% of landlords believe the Renters’ Rights Act has negatively affected their buy-to-let business since its main measures came into force in May this year, new data from Landbay has found.
31% described the impact as 'somewhat negative', and a further 22% said it had been 'very negative'.
However, the Q3 survey, sent to over 2,000 landlords, also highlighted the changes landlords are making to adapt to the new legislation, with 36% having increased rents, 34% changing their tenant referencing or affordability requirements, and 16% increasing their use of letting agents and/or other professional support.
Landbay said the results demonstrated how landlords were responding to the new legislation while considering the additional costs and responsibilities associated with it.
When asked what changes they had made as a result of the Renters' Rights Act, 33% said they had decided to sell or were considering selling properties, while 29% had reduced plans to purchase additional rental properties.
Other changes included 13% setting aside more money to cover costs, although 28% reported making no significant changes to their businesses.
The survey also asked landlords which individual elements of the Act had, or were expected to have, the greatest impact on their businesses, with the abolition of Section 21 'no fault' evictions cited by 32%. Changes to possession grounds were highlighted by 14%, while 15% pointed to the introduction of periodic tenancies and the end of fixed-term tenancies.
Findings come ahead of registration requirements
The survey also examined landlords' knowledge and views on the forthcoming national landlord registration requirements, with more than 90% saying they were aware that a registration service was being introduced.
However, 17% said they were aware of the register but did not fully understand the requirements, while a further 17% knew a register was being introduced but did not know the details.
When asked about the likely impact on their businesses, 65% expected the new registration system to increase costs, while 44% anticipated spending more time managing their properties.
38% believed the requirements could lead them to increase rents where possible, while 33% said they could make them less likely to purchase additional properties and 26% believed they could make them more likely to sell. 12% expected the registration requirements to have little or no impact on their businesses.
The survey also highlighted differences in how prepared landlords feel for the new requirements, with 59% describing themselves as either ‘very’ or ‘quite prepared’ for the introduction of landlord registration.
However, 24% said they were either not very prepared or not prepared at all, while a further 17% said they did not yet know enough about the requirements to assess their level of preparation.
"One year on from the Renters' Rights Act becoming law, we are beginning to understand how landlords have responded to the changes, with more than half reporting a negative impact on their businesses," Rob Stanton, sales and distribution director at Landbay, said.
"Perhaps more telling is the number who have already increased rents, changed tenant requirements or reconsidered their plans to buy and sell properties.
"These are not simply concerns about what might happen in the future. Landlords are already making practical decisions based on the requirements they now face, although the impact will inevitably differ depending on individual circumstances and portfolio structures.
"The findings around landlord registration are also interesting, particularly given the high level of awareness but the more mixed picture when it comes to understanding and preparation. Many landlords expect the new requirements to increase both the costs and time involved in managing their properties, adding to the pressures they are already facing.
"This week's Budget announcement of a further increase in income tax on property income for landlords holding properties in their personal names across England, Wales and Northern Ireland adds another financial consideration, particularly for those already reviewing the viability of their existing portfolios and future investment plans.
"Landlords need clear guidance about their responsibilities and sufficient time to prepare for the changes still to come.
"At Landbay, we recognise the importance of supporting landlords with their existing borrowing and future investment plans, while ensuring the introduction of further requirements does not unnecessarily discourage investment or reduce the supply of homes available to tenants."
