A survey by a major property firm shows 70% of landlords raising rents to cover increased compliance costs.

Allsop’s research also suggests more than two in five private landlords are unlikely to continue letting properties because of the legislation.

In the survey of more than 1,000 respondents, 41.7% said they are unlikely or very unlikely to continue following the abolition of section 21 – seen as vital for landlords to maintain control of their property investments. 

Among single-property landlords, the figure rises to 51.8%.

Other key findings from the research include:

• Nearly a third of respondents (30.3%) said they plan to sell all of the homes they let out, with a further 18% planning to reduce the number of homes in their portfolios (representing a combined 48.4% of landlords who are planning to reduce their exposure to or exit the sector);

• 70.3% of landlords said they would respond to increased compliance costs by raising rents, while a further 23.2% said they would sell their properties;

• Only 19.3% of respondents to the survey felt ready to meet the new standards of the Renters Rights Act

The research also gives clues into how England’s private rented sector is going to evolve. 

Regulatory pressures are more likely to put off single-property landlords than larger, professional landlords – with nearly two thirds (62.5%) of single-property landlords looking to reduce investment or exit entirely compared to just over one third (36.8%) of landlords with 26 or more properties.

Meanwhile, 44% of landlords with 26 or more properties plan to increase or maintain their investment levels over the coming years, compared to just a quarter (25%) of single-property landlords.

Seb Verity, Head of Research at Allsop, says: “England’s private rental sector isn’t simply shrinking – it’s also consolidating. 

“Smaller, often accidental landlords are exiting while larger, more institutional operators are selectively holding or growing.

“The Renters Rights Act looks likely to succeed in its ambitions to professionalise the private rented sector and to drive up standards, which is certainly to be welcomed. 

“Greater security of tenure and clearer redress mechanisms are a good thing. 

“But the cumulative weight of regulatory change – layered on top of mortgage rate rises, tax reform and EPC obligations – is testing the resolve of a large cohort of smaller landlords, many of whom provide well-managed, good quality homes for families and many of whom seem no longer to feel they’ll be able to continue doing so. 

“This will increase the cost of renting at a time when simply too few homes are being built to meet our housing needs.

“The Renters Rights Act represents the latest transformation of England’s housing stock. 

“Whether that structural shift ultimately serves tenants well remains an open question. 

“Much of what it seeks to do is welcome but, in the absence of a more effective strategy in parallel to increase housing supply and affordability, it may well end up serving only to add to or compound existing housing challenges.”

The survey was conducted among the client bases of Allsop’s residential auctions business – the largest residential property auction house in the UK – and its residential investment team, which advises clients on the buying and selling of larger portfolios of homes, including private rented sector blocks of flats, Build To Rent and student accommodation.