Comment: The unintended consequences of the Renters’ Rights Act – Mortgage Strategy
Much of the discussion around the abolition of Section 21 under the Renters’ Rights Act has rightly focused on improving protections for tenants and creating a more stable environment within the private rented sector (PRS).
While few would disagree that renters deserve a more secure housing experience, it’s important to consider not only the intended outcome but also how the market will change in response.
A notable trend in recent years is the decrease in buy-to-let investing by private landlords. Rising borrowing costs, additional compliance and further changes to taxation have all contributed to a rental market that no longer supports smaller landlords.
A healthy rental market requires both tenant protections and a competitive landscape of multiple landlords
Although there has not been an overnight exodus, many smaller landlords are being forced to reassess the role of property investment within their wider financial plans and whether it is now a realistic investment.
The Renters’ Rights Act is unlikely to be the sole driver of change in the rental market, but by adding restrictions to landlords there is no doubt that it will only exacerbate an existing problem. With smaller landlords being discouraged, there is only one logical question: who will end up owning the rental market?
Historically, the PRS has been characterised by thousands of individual landlords operating independently across local markets. Of course, this model has never been without its flaws, but it has created a diverse marketplace with a broad range of participants.
Although competition between landlords has helped shape the pricing of rental properties, we may be heading towards the gradual consolidation of that market. Ownership is shifting towards larger portfolio landlords, corporate operators and institutional investors.
The long-term success of any legislation should be measured not only by the protection and advantages that it provides to tenants but also by the rental market it helps to create
These organisations can bring benefits, including professional management structures, operational efficiencies and access to larger pools of capital, but it’s important to consider the longer-term economic implications of a more corporate-dominated rental market.
Useful competition
When rental stock is distributed across thousands of independent owners, tenants can benefit from a greater degree of competition.
A diverse rental market helps create housing options across a broad spectrum of price points, ensuring accommodation remains accessible to tenants with differing levels of income and affordability. This competition is particularly important for renters at the lower end of the market, where choice and availability are often under pressure.
As ownership becomes concentrated among fewer corporate organisations, however, there is a legitimate concern as to whether those same competitive dynamics will continue. It is not difficult to envisage a small town where a significant proportion of rental properties are controlled by only one or two large companies.
Although there has not been an overnight exodus, many smaller landlords are being forced to reassess the role of property investment
The concern is not that large landlords will intentionally seek to increase rents or restrict supply. Rather, it is that reduced competition naturally creates an environment where market forces become less effective. If renters have fewer alternatives, the balance of power inevitably shifts. Over time, this could lead to reduced choice, greater pricing influence among larger operators and a rental market that becomes increasingly shaped by a smaller number of participants.
At the same time, the sector still has a supply challenge. If policy changes continue to accelerate private landlord exits faster than replacement stock enters the market, pressure on rental prices is likely to remain a persistent issue, regardless of the intentions behind any new legislation.
Affordability pressures are no longer confined to aspiring homeowners. Rental affordability has become an equally significant challenge. Many tenants are being forced to dedicate a larger proportion of their income to housing costs, making it increasingly difficult to save a deposit for homeownership.
The long-term success of any legislation designed to improve the PRS should be measured not only by the protection and advantages that it provides to tenants but also by the rental market it helps to create. Should the result be a more concentrated sector with fewer participants, less diversity of ownership and reduced competition, the unintended consequences may prove far more significant than anticipated.
With smaller landlords being discouraged, there is only one logical question: who will end up owning the rental market?
Ultimately, a healthy rental market requires both tenant protections and a competitive landscape of multiple landlords. Achieving one at the expense of the other may end up leaving renters with fewer choices, less flexibility and a market that functions less effectively than intended.
Gerard Boon is managing director of Boon Brokers
This article featured in the July/August 2026 edition of Mortgage Strategy.
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