"What we are seeing is a natural recalibration. As landlords lose certain safeguards, many will look to mitigate risk elsewhere, most commonly through stricter affordability criteria."
- Sim Sekhon - LegalforLandlords
The Renters' Rights Act may be designed to protect tenants, but LegalforLandlords is warning it could produce an unintended consequence: a growing cohort of prospective tenants who are effectively unlettable, not because they are legally barred from renting, but because landlords are recalibrating risk in ways that make them commercially unacceptable.
The Act aims to create a more secure and stable rental environment. However, it is also prompting landlords to reassess their exposure, particularly where their ability to respond to non-payment or recover possession is now more constrained.
Affordability as the new filter
The removal of no-fault eviction powers, combined with persistent court delays, is expected to make regaining possession significantly harder and more time-consuming. Periodic tenancies will reduce landlords' control over tenancy structure. Together, these changes increase both the duration and cost of resolving disputes, encouraging greater caution at the point of letting.
Affordability and financial resilience are set to become the primary filters through which applicants are assessed. Those earning below roughly 2.5 to 3 times the annual rent, applicants with irregular or non-traditional income, students without strong guarantors, individuals with impaired credit histories, and benefit recipients all face greater scrutiny. While discrimination rules may tighten, commercial risk assessments are hardening in parallel.
LegalforLandlords has identified several pressure points likely to define the post-reform market. Referencing processes are expected to become both stricter and slower, raising the risk of failed applications late in the process.
Letting agents are likely to pre-filter applicants more aggressively, reducing the number of viewings per property and contributing to longer void periods and higher administrative costs. Tenants who meet enhanced criteria will secure homes more quickly; others may find themselves repeatedly rejected.
Guarantors, rent in advance and insurance
Affordability thresholds are also shifting. Many landlords are moving from traditional benchmarks of around 2.5 times the annual rent to 3 times or more. In higher-cost areas such as London, that shift alone could exclude a substantial portion of otherwise viable tenants, creating the appearance of overpriced stock when, in reality, fewer applicants meet the revised criteria.
Reliance on guarantors is set to increase. For tenants who fall short on affordability metrics, a guarantor will become essential rather than optional. Access to suitable guarantors is, however, uneven, and further complications arise where guarantors are based overseas or fail referencing checks. Transactions may collapse later in the process, adding friction to an already strained system.
Rent in advance, historically a mechanism used to offset weaker financial profiles, is also facing growing scrutiny. Regulatory and ethical concerns may limit its use in practice, closing another pathway for tenants who do not meet standard thresholds. Rent guarantee insurance products, meanwhile, are likely to involve more rigorous underwriting, while broader obligations around energy performance, safety certification, and redress schemes continue to expand, reinforcing a more conservative landlord stance overall.
A mismatch between demand and eligibility
The wider challenge, according to LegalforLandlords, is not a lack of demand but a mismatch between demand and eligibility. There is no shortage of renters, but there is an increasing shortage of renters who can simultaneously pass affordability checks, satisfy referencing criteria, and meet insurer requirements.
This creates a form of hidden vacancy risk, where properties appear to be in high demand but remain unlet due to repeated application failures.
The role of letting agents is evolving as a result. Agents are becoming risk managers as much as intermediaries, with a growing focus on screening, compliance oversight, and advisory services aimed at reducing landlord exposure.
"The intention behind the Renters' Rights Act is clear and, in many respects, necessary," said Sim Sekhon, group chief executive of LegalforLandlords. "It aims to create a fairer, more secure rental market for tenants. However, as with any significant regulatory shift, there are knock-on effects that cannot be ignored."
"What we are seeing is a natural recalibration. As landlords lose certain safeguards, many will look to mitigate risk elsewhere, most commonly through stricter affordability criteria. The challenge is that this can unintentionally exclude otherwise reliable tenants who may fall just short on paper."
"The solution lies in balance. We need to ensure landlords feel protected, but not at the expense of shutting out large sections of renters. That is where more innovative, proportionate approaches to risk, whether through better referencing, insurance-backed products, or greater regulatory clarity, will play a crucial role in keeping the market functioning for everyone."
The Renters' Rights Act will not dampen demand for rental housing. What it will do is raise the bar for what constitutes an acceptable tenant, leaving a growing number of applicants who are technically eligible to rent yet unable to secure a home in practice.
