Three months after the Renters’ Rights Act became law on 1 May, early data suggests the legislation may be producing unintended consequences for the rental market, according to analysis from property technology firm Goodlord.
The Act, which abolished Section 21 ‘no-fault’ evictions and introduced new rent increase restrictions, was designed to strengthen tenant protections. However, initial market indicators point to price rises and supply constraints that could affect both landlords and renters.
Rent inflation accelerates
Goodlord’s Rental Index, based on verified tenancy transactions rather than advertised prices, recorded annual rent inflation of 1.7% during April and May. This figure jumped to 6.5% in June, marking the sharpest rise in nearly two years.
The increase follows the implementation of Section 13, which limits landlords to one rent increase per year. The June inflation rate exceeds recent CPI figures by more than double and outpaces wage growth.
Advance rent cap creates access barriers
The legislation’s cap on advance rent payments, intended to protect vulnerable tenants, appears to be restricting access for certain groups. International students and others without UK guarantors or credit histories, who previously secured housing by paying rent upfront, may now face exclusion from the rental market.
Reports from Inside Housing indicate some operators are using tenancy restructures to reset rents, potentially circumventing the Act’s intent to limit increases. Specialist lenders continue to support portfolio landlords, though the regulatory environment has become more complex.
Property sales face new restrictions
The reletting ban tied to Ground 1A prevents landlords from re-letting properties for 12 months if a sale falls through. Estate agency Hamptons estimates that, had this rule applied last year, between 80,000 and 100,000 unsold rental homes would have been unable to be sold or re-let.
Goodlord data from April indicated that half of landlords wanted to sell or reduce their market stake within 12 months. The new restrictions appear to be causing landlords to hold onto properties in slower markets, particularly affecting flats.
Tenant awareness remains low
Nearly half of tenants remain unaware or unsure about how their fixed-term agreements have been converted to rolling contracts under the new legislation, according to Goodlord figures. A third of tenants have experienced rent increase attempts since 1 May, representing the most common landlord response to the policy changes.
Estimates suggest the legislation has cost landlords £5,000 on average, expenses that industry observers expect will be passed onto renters. Broader housing affordability concerns continue to affect the wider property market.
Political outlook
The appointment of Andy Burnham as Prime Minister suggests further intervention may be forthcoming. During his tenure overseeing Greater Manchester, fines issued against landlords rose 43%, indicating a robust enforcement approach to rental regulation.
Tom Goodman, Managing Director of Goodlord, stated that while Section 21 needed to be abolished and stronger protections against poor conditions were overdue, early outcomes suggest the market remains far from stable. The direction of travel, he noted, points to a system under stress rather than one that has been fixed.
The rental market faces a period of adjustment as landlords and tenants navigate the new regulatory framework. Whether the Act achieves its stated aims of improving tenant security whilst maintaining adequate housing supply remains to be determined as more data becomes available in coming months.
