Landlords face £5,000 compliance costs under new act

Landlords have incurred median costs of £5,000 in complying with the Renters’ Rights Act, according to a survey of approximately 200 property investors conducted by Handelsbanken.

The figure, primarily drawn from professional landlords and portfolio holders, exceeds earlier government estimates for compliance costs under the legislation. The survey reveals that 40% of landlords are now prioritising lower-risk tenants in response to increased costs and new eviction procedures that make removing problematic tenants more expensive and time-consuming.

Portfolio adjustments

The financial pressures are prompting significant changes in landlord behaviour. Twenty percent of respondents reported selling properties due to elevated costs, while 19% have removed properties from the rental market entirely. These portfolio adjustments reflect broader challenges facing the sector, including higher borrowing costs, increased maintenance and repair expenses, more expensive insurance premiums, and energy efficiency upgrade requirements.

Nearly half of surveyed landlords—46%—indicated that cost pressures have forced them to delay upgrade or improvement works, raising concerns about the condition of existing rental housing stock.

Market implications

James Sproule, UK Chief Economist at Handelsbanken, noted that the changes extend beyond rental pricing decisions. “Higher costs and greater tenant rights are feeding into rent decisions, but they are also changing how professional investors think about tenant risk, affordability and long-term portfolio planning,” he said.

Sproule acknowledged the dual nature of the regulatory changes: “Higher standards and stronger tenant protections are intended to improve the rental sector over the long term. But they also come with real costs, and our research shows professional investors are already adapting their behaviour in response.”

The findings suggest that rental market dynamics are shifting, with affordability and access becoming increasingly interconnected as landlords face mounting operational pressures. The increased selectivity among landlords may present additional challenges for renters seeking accommodation in an already constrained market.