Will the Renters’ Rights Act mark the end of accidental landlords? – BuyAssociation Group

So-called ‘hobby’ or ‘accidental landlords’ are increasingly coming under pressure as the Renters’ Rights Act approaches, with the changes expected to favour more professional operators and those whose portfolios are managed by experienced third parties.

Louisa Sedgwick, head of mortgages at Paragon, says the new rules will make it harder for those types of landlords to manage risk and push those who don’t have sufficient time or knowledge to head towards the exit.

She adds: “There is absolutely a move towards hobby landlords leaving the sector. It just becomes harder, and I think this is kind of the point where landlords say, unless I’m going to do this either as a full-time role or certainly concentrate and focus time and effort on making sure that I can make this a viable business, then I’m actually going to move out of the sector.”

Tenant selection – a critical pressure point

A critical pressure point is tenant selection. According to Sedgwick, landlords are already increasing due diligence ahead of the 1 May implementation, as a result of the reduced flexibility and the difficulty of evicting problem tenants under the new regime.

“I think what will happen without a shadow of a doubt, and you are already seeing this, is that the due diligence that landlords will do on any new tenant will be significantly higher than it has been in the past.”

One immediate consequence of the Renters’ Rights Act is the removal of rent in advance as a negotiating tool.

End of rent in advance

Sedgwick says: “A tenant can now no longer pay rent in advance, and that might have been a way to secure a property if they had a previous poor credit history or they weren’t working or relying on universal credit. We’ll see more vulnerable tenants not being able to secure properties as a result of the Renters’ Rights Act.”

The legislation lands on top of a series of changes that have already impacted landlords’ economics, including higher Stamp Duty on additional properties and the removal of mortgage interest tax relief. For smaller or accidental landlords, these cumulative pressures are making the model harder to sustain without a more structured, hands-on approach.

The consequences of that are now feeding through into supply. In London, where rental demand is most concentrated, listings in prime central and outer areas were 15% below the five-year average in the first quarter of 2026, according to Rightmove data.

Rising rents

At the same time, rental values have continued to rise. In prime central London, rents increased by 1.2% in the year to March, taking growth over the past decade to 29%. Prime outer London recorded annual growth of 2.8%, with rents up 24% since 2016.

For landlords who remain, tighter supply has supported returns. Average gross yields in prime central London reached 4.6% in March, compared with 2.9% ten years ago – a combination of rental growth and softer property prices.

Sedgwick also highlighted the broader policy environment, noting that while industry bodies, including the National Residential Landlords Association, UK Finance and the Bank of England Property Forum engaged with government during the legislative process, the direction of travel was largely fixed.

“My feeling was that this was in the Labour Party manifesto, and as such, they were going to implement it… there was just no going back on this particular change in legislation.”

Looking ahead

Looking ahead, further regulation is likely to exacerbate the situation. Minimum Energy Efficiency Standards, which will require rental properties to reach an EPC rating of C by 2030, are expected to add yet another layer of cost and operational complexity.

“This particular change in legislation, I think is going to be bigger and potentially more demanding because I don’t believe we’ve got the infrastructure to support it. We’re talking 1,800 properties per day that will need to be upgraded by October 2030.”

Taken together, these changes are likely to result in a more structured rental market, where compliance, oversight and ongoing management play a larger role in day-to-day ownership.

“You’ve seen the move towards larger apartment blocks with concierges and gyms that have been built by insurance and investment companies,” she said. “It is going to be a community of landlords that do this as part of their everyday roles as opposed to doing this just as a hobby or off the side of the desk.”