A recent report from Savills highlights a significant shift in the private rented sector, with larger landlords expected to better manage the increasing regulatory demands introduced by the forthcoming Renters’ Rights Act. This development may lead to smaller landlords exiting the market, potentially exacerbating the existing shortage of rental properties, a matter of concern for UK landlords and letting agents alike.

Regulatory changes and their impact on landlords

The private rented sector is facing a recalibration in the balance of power between landlords and tenants, driven by legislative changes such as the Renters’ Reform Bill proposed by the Conservatives and now the Renters’ Rights Act set to come into force on 1 May 2026. According to the Savills report, these changes introduce additional regulatory burdens that are more manageable for larger, wealthier landlords who can spread risk across extensive property portfolios.

Lucian Cook, head of residential research at Savills and author of the report, explains that larger landlords are “best placed to deal with an additional regulatory burden” due to their resources and scale. Conversely, smaller landlords, particularly those with higher levels of debt, may find it challenging to comply with the new regulations, prompting a wave of sales within this group.

Market implications for smaller landlords and rental supply

The anticipated exit of smaller landlords from the sector could have several consequences. Some properties sold by smaller landlords may be purchased by first-time buyers, potentially reducing the rental stock further. Others may be acquired by larger landlords who meet specific return expectations, thereby consolidating property ownership within fewer hands.

Despite these shifts, the report suggests that the private rented sector will remain undersupplied. This is compounded by the introduction of an additional income tax rate on investment income, as implemented by Chancellor Rachel Reeves, which is likely to support expectations for future rental growth. For landlords, this signals a market environment where demand for rental properties may continue to outstrip supply, potentially driving rental income upwards.

Housebuilding prospects and planning reforms

The Savills report also forecasts a 2% growth in mainstream house prices for 2026, with a cumulative 22% increase expected over the next five years. This outlook is influenced by recent legislative developments, including the Planning and Infrastructure Bill, which has received Royal Assent and aims to create a more relaxed planning environment across England.

Lucian Cook notes that despite these reforms, housebuilders have struggled to capitalise on the improved planning conditions due to weaker sales demand. The Autumn Budget did not introduce measures likely to change this trend significantly in the short term. However, if market conditions improve from 2027, with stronger price growth and increased sales activity, it is anticipated that housebuilders’ appetite for land will increase, potentially leading to more new homes entering the market.

What this means for UK landlords and agents

For landlords and letting agents, these developments underscore the importance of understanding the evolving regulatory landscape and its impact on the rental market. Larger landlords may find opportunities to expand their portfolios as smaller landlords exit, but the overall undersupply of rental properties could present challenges in meeting tenant demand.

Agents should be prepared to advise clients on the implications of the Renters’ Rights Act and the potential market shifts. Additionally, staying informed about planning reforms and housebuilding trends will be crucial for anticipating changes in housing supply and rental market dynamics.

Upcoming support for landlords through TLA’s Trusted Partners Hub

In response to the changing market and regulatory environment, The Landlord Association (TLA) is launching a new Trusted Partners Hub in the first quarter of 2026. This initiative will feature verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest to join the hub via the TLA website.