Dwelly warns private rental sector faces tough period amid AI shift

Dwelly warns private rental sector faces tough period amid AI shift

Dwelly, a PropTech platform that has acquired multiple small UK letting agencies, warns the private rental sector is under pressure from rising regulation and costs, driving increased reliance on technology and professional agents.

Dwelly, a PropTech platform specialising in lettings agency services, has raised concerns about the private rental sector’s current challenges. The company, which has acquired ten mostly small independent letting agencies across the UK during 2025, says landlords are leaving the market amid rising regulation, increased operating costs and the impact of the Renters’ Rights Act. Despite this, Dwelly believes technology, particularly artificial intelligence (AI), will become essential for managing compliance and operational demands.

Dwelly’s acquisitions include well-regarded agencies such as Paramount Properties, Goodwin, Lime Property, Albery Tyson, Elliot Oliver, Move, Eden Harper, AP Morgan, Settio and Shaws. The platform now manages around 15,000 rental units and has access to US$170 million in investment to expand further. The company’s strategy involves injecting AI and PropTech solutions into these agencies to automate administrative tasks and improve efficiency.

Dwelly’s perspective on sector pressures and AI adoption

According to Dwelly, the private rented sector has faced a predominantly negative narrative over the past two years. Landlords are exiting the market due to increasing regulation, tax burdens and rising operating costs. The Renters’ Rights Act, which has reshaped tenancy law and landlord obligations, is cited as a significant factor adding to compliance complexity.

Dwelly highlights that while some smaller landlords have chosen to leave, those remaining are operating more professionally, often relying on experienced letting agents to manage the increasingly complex legal and regulatory environment. This professionalisation trend is expected to accelerate as the Renters’ Rights Act becomes fully embedded.

The company emphasises that rather than reducing the need for letting agents, these reforms increase the demand for agents capable of delivering compliant, high-quality property management at scale. Dwelly’s AI platform is designed to automate much of the growing administrative burden related to compliance, maintenance, communication and day-to-day management, freeing agents to focus on advising landlords and supporting tenants.

Context of rising compliance and operational demands

Since the introduction of the Renters’ Rights Act and other recent rental reforms, landlords face more stringent obligations around property standards, tenant rights, and documentation. Compliance requirements have expanded, including enhanced safety checks, deposit protections, and transparent communication protocols. These changes have increased the administrative workload for landlords and agents alike.

At the same time, operating costs have risen due to inflation, energy prices and maintenance expenses. Many smaller landlords, who previously managed their properties with minimal professional support, now find the regulatory environment challenging to navigate. This has led to a contraction in the number of small-scale landlords and a shift towards more professional management.

Letting agents are under pressure to maintain operational efficiency while ensuring compliance with evolving legislation. This has created demand for technology solutions that can automate routine tasks, reduce errors and provide real-time compliance monitoring. AI-driven platforms like Dwelly’s aim to meet this need by streamlining processes such as rent collection, maintenance scheduling, tenant communication and legal documentation.

Practical implications for landlords and agents

For landlords, the growing complexity of compliance means professional expertise is increasingly necessary. Small portfolio landlords may struggle to keep up with changing legal requirements without support from experienced letting agents or technology tools. The use of AI can help by automating reminders for safety checks, generating compliant documents and tracking maintenance requests.

Letting agents adopting AI platforms can reduce the time spent on administrative duties, allowing more focus on client relationships and strategic advice. However, integrating new technology requires investment and training. Agencies must ensure that AI tools are reliable, secure and compliant with data protection laws.

Landlords and agents should also be mindful that technology is a tool to assist, not replace, professional judgement. While AI can handle routine tasks, complex tenancy issues and disputes still require human expertise. Maintaining a balance between automation and personal service will be important as the sector evolves.

Uncertainties and future developments

The full impact of the Renters’ Rights Act and other reforms on landlord behaviour and market structure remains to be seen. While Dwelly predicts increased professionalisation and technology adoption, some landlords may continue to exit the market, potentially reducing rental supply.

The effectiveness of AI platforms in managing compliance and tenant relations will depend on ongoing development and regulatory acceptance. Data security, algorithm transparency and ethical considerations around AI use in housing are areas requiring careful attention.

Landlords and agents should monitor government guidance and industry developments closely. Changes in legislation, enforcement practices or market conditions could influence the role technology plays in property management.

What landlords should consider now

• Review current compliance procedures and identify areas where technology could improve efficiency or reduce risk.
• Assess the suitability of AI-driven property management platforms, considering features, costs and data security.
• Stay informed about regulatory changes, especially relating to the Renters’ Rights Act and safety obligations.
• Maintain clear records of inspections, communications and repairs to support compliance evidence.
• Consider working with letting agents who demonstrate expertise in managing complex compliance requirements and technology integration.

Supporting landlords through compliance and technology

Membership of The Landlord Association (TLA) offers practical support for landlords and letting agents adapting to regulatory and technological changes. TLA provides access to compliance resources, up-to-date guidance on tenancy law and property standards, and document templates tailored to current legislation.

TLA is also developing ORBIT, a new property management and compliance platform currently in BETA testing. ORBIT aims to help landlords and agents organise property records, manage rental documents, and keep evidence of compliance activities in one place. The platform includes tools for recording inspections, repairs and communications, supporting landlords in meeting their legal obligations efficiently.

Exploring TLA membership and ORBIT BETA access can assist landlords and agents in preparing for the evolving demands of the private rented sector, particularly as AI and PropTech become more integral to property management.

The integration of AI into lettings agencies, as demonstrated by Dwelly’s acquisitions and platform development, signals a shift towards greater reliance on technology to handle compliance and operational complexity. Landlords and agents who embrace these tools while maintaining professional standards may be better positioned to manage the challenges ahead.

Sources: Landlord Today