The unintended consequences of the new legislation that is meant to help the private rented sector

Thought leadership by Adam Pigott – CEO Openbrix 

‘With every Assured Shorthold Tenancy (AST) transitioning into an assured tenancy, the private rented sector (PRS) enters a new chapter—not one of sudden collapse, but of gradual and foreseeable transformation.

The Renters’ Rights Act introduces greater certainty for tenants while removing flexibility for landlords. Yet beneath this promise of security lies a series of unintended consequences that will quietly reshape the PRS over the coming decade.

The origins of this legislation are as significant as its impact. The campaign that led to its creation was built on a fundamental misrepresentation. Section 21 was never an eviction notice—it marked the agreed conclusion of a fixed-term tenancy. Labelling it a “no-fault eviction” was politically expedient but legally inaccurate. Repeated often enough, the slogan became accepted truth and ultimately law. Policy was crafted from headlines, not housing legislation.

The government was fully aware of this distinction. They understood the function of Section 21 and the role ASTs played in revitalising the rental market. Nonetheless, they chose a narrative that prioritised political gain over legal clarity. In doing so, they dismantled the very mechanism that enabled tenant security in the first place.

Prior to the 1988 Housing Act, private renting in Britain was stagnant. Rent Act tenancies offered lifetime security, making repossession nearly impossible. Rents were suppressed, turnover was minimal, and investment had all but disappeared.

The introduction of ASTs changed that. Section 21 allowed landlords to regain possession at the end of a fixed term, restoring confidence in the market. This single clause unlocked billions in private capital, catalysing the buy-to-let mortgage boom of the 1990s and 2000s.

ASTs made the PRS investable. They balanced tenant stability with landlord liquidity. The Renters’ Rights Act disrupts that balance, returning the market to a rigidity that once drove investors away.

Private investors did not enter the market to fulfil a public housing role. They did so because the risk-reward equation made sense: reasonable yields, predictable possession rights, and operational flexibility. The new legislation imposes obligations akin to social housing—indefinite tenancies, rent restrictions, and limited control—without offering the financial support that makes such models viable.

This is not reform. It is a statutory reclassification of private capital into public utility—without consent. While Build-to-Rent operators may absorb these changes due to their long-term, managed models, individual landlords cannot. Their business model relies on flexibility and renewal. Conflating these two approaches creates a market that serves neither.

A critical but overlooked detail lies in mortgage conditions. Most buy-to-let agreements explicitly require properties to be let under ASTs, prohibiting assured tenancies. By mandating assured tenancies, the Act places landlords in technical breach of their mortgage terms—through no fault of their own.

Lenders must now revise products, reissue documentation, and reassess risk models for a market where repossession timelines extend from weeks to months. Until this recalibration occurs, refinancing will stall and credit will tighten. Changing the legal framework of tenancies disrupts not just contracts, but the flow of capital itself.

Initially, tenants may welcome the perceived permanence. The fear of eviction fades, and security feels like progress. However, permanence has its drawbacks. Over time, properties without renewal stagnate. Kitchens become dated, carpets wear, and bathrooms deteriorate. Landlords lose the incentive to modernise, and tenants lack the authority to do so.

What begins as comfort may evolve into frustration. The slow decline seen in post-war council housing risks repeating itself—this time without public funding to intervene. The absence of renewal leads to a disconnect between tenant expectations and property realities.

Many rental properties are owned by long-term investors now entering retirement. Upon their passing, beneficiaries may lack the patience or interest to manage assured tenancies with limited control and reduced yields. The logical response will be to sell—triggering the only remaining clear route to vacant possession.

These disposals will not convert tenants into homeowners. Instead, properties will be sold to those ready to proceed—first-time buyers, chain-free movers, or redeploying investors. Ownership demand will be met not by policy, but by demographic inevitability.

As succession sales increase, rental supply will contract. Remaining properties will command higher rents—not due to greed, but scarcity. A leaner PRS will emerge fewer homes, higher rents, and more professional ownership.

With Section 21 removed, the market will adapt. Landlords will rely more heavily on statutory grounds for possession—arrears, nuisance, damage, dishonesty, and persistent lateness. Informal resolution will give way to formal procedure. The discretion that once defined good agency will be replaced by regulation, as seen in housing associations already evicting for minor breaches to maintain operational flow.

This legislation, intended to foster harmony, may instead eliminate it. The next solution will not come from policymakers. It will be engineered by those who built the PRS infrastructure in the 1990s—those who understand its mechanics. But the unintended consequences will be severe, particularly for the vulnerable.

Removing flexible termination rights shifts the gatekeeping to the point of entry. Referencing will become more stringent. Credit thresholds will rise. Deposit requirements will harden. Guarantor conditions will multiply. Applications will be assessed for permanence, not suitability.

Those with imperfect credit, irregular income, or complex histories—the very individuals this legislation aimed to protect—may find themselves excluded entirely. The campaign against “no-fault evictions” may inadvertently create “no-chance applications.”

Tenants who breach terms will face formal possession proceedings and lose not only their homes, but their references, deposits, and future rental prospects. The tolerance that once allowed second chances will be replaced by rigid process.

The PRS will become smaller, more selective, and less forgiving. It will continue to function—but for fewer people, at higher cost, and with reduced flexibility. This is not speculative; it is the foreseeable outcome of removing adaptability from a market that depends on it.

The government promised security. What it has delivered is a system that excludes the vulnerable, destabilises investment, and reduces supply—while claiming moral victory.

The Renters’ Rights Act was presented as protection. In practice, it may create a PRS that protects itself by saying no—and leave a generation of renters betrayed by the policy that claimed to support them.

The RRA will not help tenants, it will reduce stock and push up rental values. Less supply, ever increasing demand which means higher rental prices and a more arduous process for the application’.

Adam Pigott is CEO of tlyfe & Openbrix, tlyfe is a tenancy life app that has had over 200,000 downloads from tenants looking to be rent ready. For further information use this LINK. 

Andrew Stanton CEO Proptech-PR

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