Corporate landlords are poised to significantly change the face of the private rental market by 2025, as new regulations and the impending Renters' Rights Bill reshape the sector. The lettings and sales agency Leaders Romans Group suggests these corporate entrants will be less affected by regulatory changes compared to traditional buy-to-let landlords, who are expected to exit the market.
According to Andy Jones, group director of corporate and Build to Rent (BTR) at Leaders Romans Group, the Renters' Rights Bill will impose stricter rules within the private rented sector (PRS) but will have limited traction on the burgeoning BTR market. Jones noted, “The Renters’ Rights Bill will have a significant impact on the private rented sector, including ending Section 21 ‘no fault’ evictions, replacing fixed-term tenancies with periodic tenancies, limiting rent increases, banning rental bidding, allowing tenants to request permission to keep pets, and ending discrimination against tenants who receive benefits or have children.”
With the looming changes expected from the Renters’ Rights Bill, which introduces new standards including the implementation of Awaab’s Law to the sector and the creation of a PRS database, corporate landlords are anticipated to continue their upward trend. Jones emphasized, “The impact on properties under corporate ownership, and especially Build to Rent (BTR), will be less extreme, as many of these practices already exist within the sector.”
Looking toward 2025, Jones asserted there will still be an imbalance between supply and demand. He stated, “Rental inflation has slowed to an average of 3-4% for new lets, reflecting the effects of affordability constraints and renters’ budgets now beginning to limit how much rents can rise. Despite this moderation, high demand persists, especially in regions with limited rental stock, providing considerable opportunity for investment.”
With around 12% of current property sales coming from landlord disposals, Jones sees potential for investment on the part of corporate landlords, who typically find themselves less affected by the new regulations concerning tenancy agreements and energy efficiency mandates. He argued, “The key to tackling the supply and demand imbalance could lie with the Build to Rent (BTR) sector.”
The future of rental housing is changing. There’s been explosive growth within the BTR sector, which has seen institutional investment climb significantly over recent years. The British Property Federation noted a remarkable 23% growth rate in completed BTR units over the past year alone. Currently, BTR developments include over 120,000 completed homes, with more than 273,700 units likely to materialize soon.
Initially perceived as structures primarily within London, the BTR developments are now spreading outward, owing to broader interest across various regions and reflecting the demand for professionally managed rental housing. Jones commented, “Regional growth within BTR units has surged by 31%, surpassing London’s 13% expansion, underlining the growing appeal for this sector.”
The anticipated changes driven by the Renters' Rights Bill will force traditional buy-to-let landlords to rethink their strategies, with many opting to leave the market altogether. This shift paves the way for corporate landlords who are positioning themselves as reliable entities within the rental sector.
Despite potential challenges, the next several years will prove pivotal as corporate control over the rental market solidifies. Whether this leads to improved conditions for tenants or continues the trend toward corporatization remains to be seen, but Jones's insights suggest this sector will play a key role as it adapts to the future of rental housing.
With the PRS entering this new regulatory phase, the presence of institutional investment signifies not only resilience but also expectation, bringing both challenges and opportunities for the future of renting across the UK.
