The Intermediary –- May 2026 - Flipbook - Page 49
BUY-TO-LET
Opinion
The law of
unintended
consequences
T
he Renters’ Rights Act is
driven by an ambition
to improve security and
living standards for
millions. Abolishing
‘no-fault’ evictions and
strengthening protections against
substandard properties are measures
that few within the property sector
would dispute in principle.
Yet the focus on tenant security has
obscured a critical secondary effect
that is already beginning to reshape
the UK housing market. As regulatory
burdens and financial pressures
mount, the anticipated exodus of
private landlords threatens to place
an unsustainable strain on a social
and affordable housing sector that is
already operating beyond its capacity.
Rental movements
The private rented sector (PRS)
currently houses approximately 19%
of all UK households. However, a clear
contraction is underway. According to
research by Savills, 290,000 properties
were sold out of the rental market
between April 2021 and October 2024,
accounting for 6% of the sector in
England and Wales. This arition
is driven predominantly by smaller
landlords finding the combination
of higher mortgage rates, increased
taxation and impending regulatory
changes too onerous to sustain.
The National Residential Landlords
Association (NRLA) has noted that
landlords selling is now the single
biggest cause of tenancy endings.
When landlords exit the market,
the immediate consequence is a
reduction in supply which inevitably
drives up rents for tenants. The Office
for National Statistics (ONS) reported
that average UK monthly private rents
increased by 4.0% in the 12 months to
December 2025.
This affordability squeeze is already
pushing more low-income households
towards the social housing sector,
which is entirely unequipped to absorb
this displaced demand.
As of March 2024, there were 1.33
million households on local authority
housing waiting lists in England.
The structural problem lies in how
affordable housing is practically
delivered and funded in the UK.
A significant proportion of new
affordable homes are built by private
developers and acquired by housing
associations through Section 106
agreements. In theory, this ensures
that private development crosssubsidises affordable provision. In
practice, the system is breaking down.
Housing associations are facing
severe financial pressures, driven by
the need to invest heavily in existing
stock to meet decarbonisation targets
and address building safety issues.
The National Housing Federation
has consistently highlighted the
extent of the pressure on housing
association financial capacity. Because
their capital is tied up in remediation
and retrofiing, many registered
social landlords simply do not have
the financial headroom to acquire new
units being built by developers.
The Home Builders Federation
recently reported that approximately
900 completed Section 106 affordable
housing units remain unsold, and a
further 8,500 units under construction
or due to commence are uncontracted.
There is a profound boleneck in
the supply of new affordable homes,
precisely when demand is surging.
Ramping up risk
Furthermore, housing associations
are becoming increasingly risk-averse
regarding the types of properties they
acquire and the tenants they house.
STEVE GOODALL
is chief executive at e.surv
The abolition of Section 21 removes
a mechanism that, while oen
criticised, provided a straightforward
route to deal with severe anti-social
behaviour. Evicting a tenant through
the courts is a notoriously difficult,
lengthy and expensive process. For
registered social landlords operating
on thin margins, the inability to
manage the risk of disruptive tenants
efficiently is a significant deterrent to
expanding their portfolios.
If social landlords cannot make the
commercial realities work or manage
tenant risk, they will inevitably step
back from acquiring new stock.
This creates a dangerous cycle. As
the PRS shrinks under the weight
of new legislation, more pressure
is placed on social housing. Yet the
social housing sector is financially
constrained and increasingly unable
to acquire affordable homes.
When housing associations
cannot buy these Section 106 units,
developers are oen forced to
renegotiate planning agreements to
sell the properties back into the private
market or stall development entirely.
More than 700 sites have been delayed
or stalled in the past three years for
this reason, according to the Home
Builders Federation.
The PRS and social housing are
deeply interconnected. Legislating
to protect private tenants is laudable,
but doing so without simultaneously
addressing the funding and capacity
crisis in social housing is a policy
failure. If the Renters’ Rights Act
inadvertently chokes off the supply
of both private and affordable rented
homes, the victims will be the very
tenants it was designed to protect. ●
May 2026 | The Intermediary
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