Small landlords will be forced out of PRS and replaced by money-motivated landlords

Small landlords who care about their tenants will sell up in 2026 and be replaced by “money-motivated landlords” due to new regulations, claims legal experts.

The Daily Telegraph reports mounting regulations, such as the Renters’ Rights Act, will see small landlords exit due to high costs and increased council powers.

Under the Renters’ Rights Act, councils have the power to fine landlords up to £40,000.

Smaller landlords will leave the market

Phil Turtle, compliance director from Landlord Licensing & Defence told The Telegraph: “Small landlords will inevitably be the first to sell up, worsening supply levels.

“What is already happening inevitably is that the older-style landlords who really cared about their tenants and providing decent homes for them will leave.

“New money-motivated landlords will replace them, but the focus will be on picking up properties cheap from distressed existing landlords and maximising profits.”

Mr Turtle warns that increased council powers will make it unprofitable for smaller landlords to remain in the market.

He said to The Telegraph: “Smaller landlords are going to quit the market. There are so many extra punitive fining opportunities under the Renters’ Rights Act for the councils’ money-making machine.

“Anyone with their pension tied up in property can only see the councils taking it away through massive fines for the most simple of mistakes.

“Now any slip-up on a tenancy agreement or the pre-tenancy paperwork is going to cost a minimum of £4,000 fine with, just like speeding, no leeway or compassion available from power-crazed councils enforcement officers.”

Paul Shamplina, founder and manager of legal firm Landlord Action, adds: “Self-managed landlords are more vulnerable to these penalties.

“More landlords will need to hire a letting agent, further eating away at profits.”

Good landlords have nothing to fear

However, the government claim the reforms will help landlords and tenants.

A spokesman for the Ministry of Housing, Communities and Local Government told The Telegraph: “Good landlords have nothing to fear from our Renters’ Rights Act

“Our landmark legislation will level the playing field by giving renters greater security in their homes, while landlords will benefit from a simpler tenancy system and stronger powers to take swift action against anti-social behaviour.”

However, as previously reported by Property118, industry experts have warned the Renters’ Rights Act will cause an “inevitable influx” of court cases, putting pressure on the courts.

Under the Renters’ Rights Act, Section 21 will be abolished, meaning landlords will need to rely on specific grounds for possession using Section 8 notices.

A spokesperson for the NRLA told Property118: “Wait times within the court system have become chronically over-extended over recent years, long before the government announced implementation dates for the Renters’ Rights Act.

“We expect that the introduction of the Act will lead to substantial, additional, increases in court wait times as a consequence of the removal of the accelerated procedure and increased complexity.

“As a result, we continue to urge the government to announce how they intend to reform the process ahead of the inevitable influx of cases into the court system. Without a coherent solution to this problem, there is a huge risk that the issues around court wait times will only be compounded by a lack of action”.

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