Landlords profitable but nervous ahead of Renters’ Rights Act

Most landlords remain profitable, but confidence is under strain as the Renters’ Rights Act edges closer, research reveals.

The findings from Aldermore show 85% of landlords are currently making a profit from their portfolios, with just 6% reporting losses.

Yet the same research highlights widespread anxiety about what lies ahead once the RRA begins rolling out from 1st May.

Three quarters of landlords questioned believe the legislation will negatively affect them personally, while 84% expect wider damage across the private rented sector.

RRA landlord worries

Aldermore’s director of mortgages, Jon Cooper, said: “What’s clear from the research is that most landlords have legitimate concerns about how the Renters’ Rights Act will impact their property portfolios.

“It’s vital that all landlords assess how the Act will impact their lettings activity, to protect themselves and ensure they’re able to continue offering a positive renting experience for their tenants.”

He added: “The sector faces challenges, but landlords are highly resilient.

“However, this research does highlight the tensions many landlords feel when it comes to potential knock-on effects of the Act coming into force.”

Most landlords prepared

The research also reveals that just 1% of landlords said they hadn’t heard of the Act.

Of those that do know, more than nine in 10 landlords say they are worried about court backlogs delaying possession claims.

Almost the same proportion are concerned about the planned 2% rise in income tax for landlords who own property in their personal names.

As a result, around 84% of landlords expect to tighten tenant selection, while 72% say higher rents could be used to offset additional costs or risks.

However, the findings also point to a cooling market with expectations for rental yields slipping to their lowest level in five years.

Reports of strong tenant demand have fallen to 61%, down 7% on the previous quarter and 16% compared with a year earlier.

Property118 commercial reality check

Profitability is still there. Confidence is what is wobbling.

Eighty five per cent of landlords are making money, yet three quarters feel under threat. That disconnect matters. Markets punish hesitation more than regulation. The Renters’ Rights Act does not remove profit. It raises the cost of disorder, weak processes and poor asset selection.

This is not a sector on the brink. It is a sector being forced to grow up fast.

What serious landlords should do next

Model the post RRA numbers now
Stress test each property for longer possession timelines, higher compliance friction and slower cash flow. If the deal still works on paper, confidence follows. If it does not, the asset is telling you something useful.

Audit tenant risk with intent, not fear
Tightening selection is logical. Do it professionally. Standardise affordability tests, references and guarantor policies so decisions are defensible and repeatable.

Prioritise balance sheet resilience
Court delays turn liquidity into a strategic asset. Maintain cash buffers equivalent to several months of portfolio costs. Landlords who can wait, win.

Refinance with structure, not urgency
Review loan terms, expiry dates and covenants at least 12 months ahead. Even a 0.25 per cent improvement across a portfolio compounds into meaningful protection.