"The objectives behind the Renters' Rights Act are commendable, and many of the concerns raised by the sector may ultimately prove overstated. However, housing policy is rarely without trade-offs"
- Jonathan Rolande - House Buy Fast
The Renters' Rights Act was introduced with the aim of creating a fairer and more secure private rented sector. Few would argue with the intention behind the legislation. However, as many landlords, agents and industry professionals have warned, there is a growing risk that some of the reforms could make it harder for certain tenants to secure a home in the first place.
New research from Zero Deposit shows one of the clearest examples of this unintended consequence. Today, tenants are likely to require a guarantor in around one in five local authority districts across England. Under the new rules, that figure could increase dramatically, with almost half of all districts potentially seeing guarantor requirements become commonplace.
The reason is straightforward. Until now, landlords have had a number of ways to manage financial risk when assessing prospective tenants. One of the most effective tools was the ability to accept several months' rent in advance.
This often provided a practical solution for applicants who may have had a minor adverse credit history, fluctuating income, or circumstances that made traditional referencing more challenging.
For many tenants, paying rent upfront was not a sign of financial weakness but a way of demonstrating commitment and providing reassurance to a landlord. It opened doors that might otherwise have remained closed.
The Renters' Rights Act removes that option. As a result, landlords are likely to place even greater emphasis on affordability assessments and referencing criteria. Faced with fewer ways to mitigate risk, many will inevitably become more cautious when selecting tenants.
According to the report, the average renter in England already falls £1,281 short of the standard affordability threshold used by many landlords and referencing providers. Unsurprisingly, the situation is most acute in London and the South East, where rental costs continue to outpace earnings. The report identifies 43 districts where average incomes already fail to meet current affordability requirements.
Those most affected are likely to be groups that already face challenges when navigating the rental market. Self-employed workers, students, contractors and overseas applicants often struggle to fit neatly into conventional referencing systems.
Despite being perfectly capable of meeting their rental obligations, they frequently lack the straightforward salaried employment history that landlords and insurers prefer.
In response, more landlords are expected to request guarantors. Yet this creates another obstacle. Not every applicant has access to a suitable guarantor with sufficient income, property ownership or UK residency status.
For some renters, particularly younger people, those relocating to the UK, or individuals without affluent family networks, this requirement can become an insurmountable barrier.
None of this suggests that the legislation is misguided. The objectives behind the Renters' Rights Act are commendable, and many of the concerns raised by the sector may ultimately prove overstated. However, housing policy is rarely without trade-offs.
The challenge for policymakers will be monitoring the real-world impact of these reforms and responding where necessary. Otherwise, there is a genuine risk that measures designed to improve access to housing could unintentionally reduce it, particularly for the very tenants the legislation was intended to support.
