Larger landlords will manage regulatory burden as small landlords exit

An estate agency has warned that small landlords may exit the private rented sector, as larger landlords are better able to handle the additional regulatory burdens ahead of the Renters’ Rights Act.

A Savills report on the 2026 property market outlook warns that while larger landlords are likely to stay, the sector will continue to face a shortage of rental properties.

The news comes ahead of the Renters’ Rights Act coming into force on 1 May 2026.

Wealthier landlords best placed to deal with additional regulatory burden

The report says that over the past few years, discussions around the Conservatives’ proposed Renters’ Reform Bill and now Labour’s Renters’ Rights Act have signalled a “recalibration in the balance of power between landlords and tenants,” with changes to the private rented sector that smaller landlords may find difficult to manage.

Lucian Cook, head of residential research at Savills, who authored the report said: “The provisions are likely to be most easily digested by larger, wealthier landlords who are best placed to deal with an additional regulatory burden and spread their risk across a wider portfolio of properties.

“A further wave of sales by smaller, more indebted landlords is likely to follow. Some of those properties will be bought by first-time buyers, while others, which meet larger landlords’ prescriptive minimum return expectations, will stay within the sector.

“However, there is little to suggest that the sector will remain anything other than undersupplied, especially given the additional income tax rate on investment income introduced by Rachel Reeves. This is likely to underpin expectations for future rental growth.”

Housebuilders’ appetite for land to grow

The report also predicts 2% growth in mainstream house prices for 2026, with 22% growth over the next five years.

Mr Cook added that, with the Planning and Infrastructure Bill now having received Royal Assent, housebuilding could eventually pick up.

He said: “Despite a more relaxed planning environment across England and the promise of further improvements as the pivotal Planning and Infrastructure Bill received Royal Assent, developers of all shapes and sizes have struggled to take advantage of this positive planning environment in the face of weaker sales demand.

“There was nothing of substance in the Autumn Budget to suggest that this will materially change this year. But if, as the omens suggest, we return to stronger price growth and increased sales activity from 2027, we are likely to see the brakes gradually come off and housebuilders’ appetite for land to grow.”