More than half of letting agents have increased caution when recommending tenants to landlords since the Renters’ Rights Act came into force, according to new research from Goodlord.
The survey found that 51% of agents have tightened their recommendation criteria compared to a year ago, whilst 26% of landlords report they are now more likely to reject applicants they would have previously accepted.
A significant 31% of landlords indicated they would prefer to leave properties vacant whilst searching for lower-risk tenants, rather than accept applications they consider marginal.
Market implications
The increased selectivity stems from provisions in the new legislation, including the abolition of Section 21 no-fault evictions, caps on rent paid in advance, and restrictions on tenants bidding above asking rent. These changes have altered the risk calculation for landlords and their agents.
William Reeve, chief executive of Goodlord, noted that certain tenant groups may face greater difficulty securing tenancies. “Students, foreign nationals and those with non-traditional incomes are likely to fare the worst, becoming ‘outsiders’ in an increasingly cautious market,” he said.
The findings come as buy-to-let lending shows signs of growth, though the tightening tenant screening could impact rental supply dynamics.
Sentiment shifts
The research revealed diverging sentiment across different market participants. Pessimism among agents has decreased from 48% to 40% over the past year, though this varies significantly by company size. Agencies with 11 or more staff recorded 42% optimism, compared to just 28% for those with five or fewer employees.
Tenant optimism has risen sharply from 20% to 37%, with half of those aged 25 to 34 describing themselves as optimistic about their rental prospects.
Landlords remain the most pessimistic group, though sentiment has improved slightly from 78% to 69% pessimistic. Portfolio landlords with six or more properties showed higher pessimism at 81%, compared to 63% among single-property owners.
Industry adjustment
Reeve commented on the market adjustment: “This time last year, the industry was bracing itself for a seismic shift. Now that the initial dust is settled, you can almost hear the market exhaling.”
He added that the sentiment gap between tenants and landlords “doesn’t bode well when it comes to persuading landlords to stay in the market,” a concern that could affect rental supply as broader economic pressures continue to influence property decisions.
The data suggests the rental market is entering a period of adjustment as participants adapt to the new regulatory framework, with implications for both rental availability and tenant selection criteria.
