The RRA’s ‘unintended consequences’ for landlords and tenants

The introduction of the Renters’ Rights Act (RRA) has brought significant changes to the UK’s private rented sector, aiming to enhance tenant protections and rebalance the relationship between landlords and tenants. However, emerging evidence from London suggests that these reforms may have unintended consequences, including a reduction in rental property supply and upward pressure on rents. This evolving situation warrants close attention from landlords, letting agents and property professionals to understand the broader market impacts and adapt accordingly.

Shifts in Rental Supply Following the Renters’ Rights Act

The Renters’ Rights Act was designed to empower tenants by introducing new rules on rent-setting, possession procedures, and other tenancy matters such as pet ownership. While the intention was to address long-standing imbalances, the Act has coincided with a noticeable decline in the number of landlords offering properties to rent, particularly in London. Property market analysts at Knight Frank have reported that an increasing number of landlords have chosen to exit the rental market since the Act’s implementation, which has contributed to a tightening of available rental homes.

This reduction in supply is especially pronounced in prime outer London areas, where the number of new rental listings has fallen well below the five-year average. The contraction in rental stock is a key factor behind rising rents in these locations, highlighting the complex interplay between legislative reform and market dynamics. Landlords’ decisions to sell or withdraw properties may be influenced by the cumulative impact of regulatory changes and economic factors affecting the sector.

Rising Rents and Market Pressure in London

Data from Knight Frank indicates that average rents in prime outer London increased by 3.2% in the year leading up to May 2026, marking the strongest annual growth since mid-2024. Month-on-month rental growth also reached 0.5%, the highest since September 2023. In contrast, prime central London experienced a more modest annual rent rise of around 1%, reflecting a relatively less constrained supply in higher-value markets where some landlords continue to let properties despite a weak sales market.

Rightmove’s rental listing data supports these findings, showing a 13% shortfall in new rental properties compared to the five-year average for prime London areas, and an 11% decrease compared to the previous year. This imbalance between supply and demand is contributing to upward pressure on rents, which may affect affordability and tenant choice in the capital’s competitive rental market.

Increasing Tenant Demand Amid Limited Availability

Tenant demand remains robust, with Knight Frank reporting that in May 2026 there were six prospective tenants for every new rental property listed in London, the highest ratio since September 2022. This heightened demand, combined with constrained supply, creates a challenging environment for tenants seeking accommodation and may lead to increased competition for available homes.

The Renters’ Rights Act is part of a broader context of policy changes affecting landlords, including higher stamp duty rates and the removal of certain tax reliefs. Additionally, forthcoming requirements for rental properties to meet minimum energy performance standards (EPC C) could further influence landlords’ willingness to maintain or expand their portfolios. These factors collectively shape the investment climate for buy-to-let landlords and impact the overall availability of rental housing.

Potential Financial Pressures on Landlords

Financial considerations are increasingly significant for landlords navigating the post-RRA landscape. Proposals to increase capital gains tax (CGT) rates have raised concerns about further squeezing landlord margins. Analysts suggest that such tax changes could inadvertently lead to higher rents as landlords seek to offset increased costs.

Moreover, political debates around taxation and market regulation continue to influence the sector. Examples from other areas of the economy, such as calls for price caps on essential goods and accusations of price gouging during energy price spikes, illustrate how policy decisions driven by political considerations may have unintended economic consequences. Landlords should remain aware of these broader trends as they assess their business strategies.

What this means for landlords

Landlords should be mindful that the Renters’ Rights Act and related policy changes may affect their rental portfolios in several ways, including reduced flexibility in setting rents and managing tenancies. The potential for increased regulatory and tax burdens means landlords may need to review their financial models and consider the long-term viability of their investments.

Letting agents and property managers should prepare for continued high tenant demand amid limited property availability, which may require enhanced tenant screening and communication strategies. Staying informed about compliance requirements under the RRA and forthcoming energy efficiency standards will be essential to avoid enforcement risks and maintain good landlord-tenant relationships.

What TLA members should consider

• Review rental property portfolios to assess the impact of the Renters’ Rights Act and related regulatory changes on income and operational costs.
• Stay updated on compliance obligations, including rent-setting rules, possession procedures and pet policies under the RRA, using resources such as the TLA RRA compliance pack.
• Monitor market conditions closely, particularly in London, to understand supply-demand dynamics and adjust rental pricing strategies accordingly.
• Prepare for upcoming EPC C energy efficiency requirements by planning property improvements and budgeting for associated costs.
• Engage with professional advice on tax and regulatory developments that may affect landlord profitability and investment decisions.
• Utilise TLA training and support services to enhance knowledge of legal and compliance matters, ensuring best practice in tenancy management.

TLA Training Academy

The Landlord Association provides structured guidance, compliance education and practical support for landlords, letting agents and property professionals. Members can access training and resources designed to help them stay organised, informed and prepared.

Landlords can explore the Academy here: https://landlordassociation.org.uk/tla-academy/

Those looking to join and access member support can register here: https://landlordassociation.org.uk/get-started-with-the-landlord-association/

TLA update

The Landlord Association is continuing to expand its support, resources and partner network for landlords, tenants, agents and property professionals across the UK. Service providers interested in working with TLA can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/