The Renters’ Rights Act and its impact on corporate landlords

How BTR is responding to demands for increased professionalism in the private rented sector. Article by Andy Jones, group director of corporate sales at LRG.

The Renters’ Rights Act has been met with mixed reactions across the property sector. While some private landlords have expressed concerns over increased regulation, corporate landlords – particularly those operating in the Build to Rent (BTR) sector – may find that the Act brings about considerable advantage.

The legislation has been on the cards for some time: it was originally proposed five prime ministers ago, by Theresa May as a ‘step change’ in protections for tenants with the objective, under the previous Conservative government, of ‘professionalising’ the private rented sector (PRS).

Regardless of whether or not the sector requires professionalisation, the former government, and today’s government in its stead, is undoubtedly strengthening the case for institutional investment in purpose-built rental housing.

Individual landlords dominate

The rental market is largely dominated by individual landlords, many of whom own one or two properties. While this has allowed for a diverse and flexible market, concern about inconsistencies in management quality and compliance with regulations is what has led to the imminent legislative change.

For corporate landlords and investors, this move presents an opportunity. BTR operators already adhere to high professional standards, offering well-managed, high-quality rental accommodation with a focus on long-term occupancy.

BTR schemes are professionally managed and run, typically utilising advances in proptech for increased efficiency and adhering to high standards in energy efficiency.

Predictable and stable market

A more professional rental sector translates into a more stable and predictable market, which is precisely what investors seek.

With homeownership remaining out of reach for many (alongside the fact that BTR properties appeal to those who wish for greater flexibility) the demand for quality rental accommodation will only increase. This makes BTR a compelling proposition for long-term investment.

The numbers tell it all: a decade ago, the UK had only around 3,500 purpose-built BTR homes. By 2024, that figure had surpassed 100,000, with an additional 54,000 units under construction.

Increased interest from pension funds, insurers and global investors is growing the BTR market significantly. And while this growth is considerable, it still represents only a fraction of the overall PRS.

The opportunity for further expansion is vast and there’s ample opportunity for private investment alongside corporate investment.

Realise BTR’s potential

However, to fully realise BTR’s potential, supportive policies must be put in place, from planning through to management. Better policy requires greater awareness of the benefits of BTR among politicians and other enablers.

This lack of awareness was very apparent to me at a property industry event recently: many MPs attended but while they talked enthusiastically about BTR, there was a glaring lack of understanding.

This is important because the Renters’ Rights Act alone won’t succeed in professionalising the sector: BTR must be better represented in the government’s housing strategy and both local and national policy.

Unlike other property sub-sectors, such as social housing or build-to-sell, there are few policies specifically tailored to support BTR growth. If policymakers are serious about solving the housing crisis, they must recognise BTR as part of the solution and take steps to encourage its expansion.

Incentives would help BTR

Government incentives – such as planning reform, tax reliefs and access to funding streams – could help accelerate BTR development and attract further investment.

Simplifying the planning process for BTR schemes, in particular, could be a game-changer, allowing developers to bring projects to market more quickly and efficiently and going some way to addressing the housing crisis: as it states in its manifesto, the BPF has long maintained that the BTR sector has the capacity to deliver 30,000 plus homes a year.

Moreover, local authorities should be encouraged to work more closely with BTR developers to integrate rental housing into local plans. This is particularly important in urban centres where affordability is a key concern and where high-quality rental accommodation is in high demand.

So, in conclusion, the Renters’ Rights Act is a boon for institutional investors and BTR developers who are already equipped to operate at the high standards the Act seeks to enforce.

By fostering a more professional and structured rental sector, the legislation indirectly strengthens the case for BTR as a long-term housing solution and an increasingly attractive investment opportunity.

But in meeting its ambitious housing targets, the government can’t stop there and reforms, specifically to planning, will be required to realise the full potential of the BTR sector.

Andy Jones, is the Group Director of Corporate Sales, Lettings & BTR at LRG.

Share This Article