Small landlords likely to exit as Renters’ Rights Act looms

The introduction of the Renters’ Rights Act on 1 May 2026 is expected to prompt many small landlords to leave the private rented sector. This shift will see younger, digitally savvy landlords reshape the market, requiring letting agents to adapt their services accordingly.

Impact of the Renters’ Rights Act on small landlords

The Renters’ Rights Act, set to come into force on 1 May 2026, will bring significant changes to the private rented sector in England. Goodlord, a lettings software company, predicts that these changes will lead to a notable exit of smaller landlords and letting agencies from the market. The increased regulatory pressure, compliance requirements, and reduced profit margins are cited as key factors influencing this trend.

Tom Goodman, managing director of the Goodlord group, explains: “In 2026, more smaller landlords will decide it isn’t worth it anymore and smaller agencies will also look to exit. The regulatory pressure, the compliance burden, the margin squeeze: it adds up. The ones staying in are either scaling up or finding a specific niche they can own.”

This suggests that small-scale landlords who find it difficult to absorb the additional administrative and financial demands may choose to sell their properties or cease letting altogether. For those who remain, there will be a need to either expand their portfolios or specialise in particular market segments to maintain profitability.

The rise of younger, digitally native landlords

Goodman also highlights a generational shift in landlord demographics. The new wave of landlords entering the market tend to be more digitally native, with different expectations around communication, transparency, and access to data. This change is likely to influence how letting agents operate.

He notes: “The landlords coming into the market now are more digitally native. They’ve grown up with different expectations around communication, transparency, and data access. Letting agencies still operating the way they did five years ago are going to struggle to win them.”

For UK landlords and letting agents, this means embracing technology and modern communication methods will be essential to attract and retain clients. Digital platforms that provide real-time updates, transparent reporting, and easy access to tenancy information will become increasingly important.

Changes to tenancy agreements and tenant behaviour

One of the key provisions of the Renters’ Rights Act is the abolition of fixed-term tenancies, which will be replaced by periodic tenancies. While this has raised concerns among landlords and agents about increased tenant turnover, Goodman offers a different perspective.

He suggests that periodic tenancies may actually encourage tenants to stay longer, reducing churn. “Periodic tenancies are making people nervous about churn, but I think the opposite will happen in reality. With supply and demand where it is, tenants are going to want to stay put. We’re moving toward something closer to the German model, people renting for years, not months.”

This shift could lead to greater stability in tenancies, which benefits landlords through reduced void periods and lower tenant turnover costs. However, it will require landlords and agents to focus more on tenant retention and relationship management.

Preparation is key for landlords and letting agents

Goodman emphasises the importance of preparation ahead of the May 2026 implementation date. Letting agents who train their teams on the new legal requirements, such as Section 8 and Section 13 eviction processes, and who communicate clearly with landlords will be better positioned to succeed.

He states: “May 1st 2026 will expose who has and hasn’t done the work: the ones who trained their teams on Section 8, built out Section 13 workflows, and communicated clearly with landlords, will come out on top. Next year, preparation will pay off.”

For landlords, staying informed and working closely with knowledgeable letting agents will be crucial to navigate the evolving regulatory landscape effectively.

Looking ahead: support for landlords and agents

In response to these changes, the Tenancy Lawyers Association (TLA) is launching a new Trusted Partners Hub in the first quarter of 2026. This platform will feature verified and approved service providers selected to support landlords, tenants, and property management businesses.

Service providers in legal, trades, insurance, financial, mortgage, tenant screening, and other relevant sectors are invited to register their interest to join the Trusted Partners Hub. This initiative aims to provide landlords and agents with reliable resources to manage their portfolios efficiently under the new regulatory regime.

More information and registration details can be found at the TLA website.