One in four landlords now more selective on tenants

Landlords are more cautious about the tenants they take on as a result of the Renters’ Rights Act, according to research from Goodlord.

Goodlord’s ninth annual ‘State of the Lettings Industry’ report, which surveyed 3,000 letting agents, landlords and tenants, found that 26% of landlords are more likely to reject applicants they would previously have accepted.

The Renters’ Rights Act makes it illegal for landlords to accept more than one month's rent in advance.

As a result, 31% of landlords said they would rather leave a property vacant while waiting for a lower-risk applicant

Over half (57%) of landlords said the move away from fixed-term tenancies has been a negative change overall.

Additionally, 42% of landlords expect a negative impact from the upcoming introduction of the landlord database.

The impact of the Act has also been reflected in the worsening state of rental supply.

This year, half of agents reported a decline in rental availability, while 45% saw a rise in tenant enquiries.

A lack of available properties is exacerbated by landlords continuing to exit the market.

Over a quarter of landlords (27%) said they are currently trying to reduce their holdings or have done so over the past year.

Among landlords reducing their portfolios or preparing to leave the sector, 65% said the RRA is the leading reason.

“Overall, the industry is clearly more comfortable with the devil they know: sentiment is up compared to last year and some changes have been less disruptive than feared,” said William Reeve, CEO at Goodlord.

“However, old issues continue to dog the PRS and new challenges are also emerging.

“Landlords leaving, rising demand, squeezed supply and high rents are putting huge pressure on all stakeholders.

“And the unintended consequences of the RRA are adding to this burden, unwittingly making it harder for certain tenants to get their foot through the door.”