BLOG: Reforms will reshape rental market
Property lawyer and Devonshires Partner Mark Foxcroft looks at what professionalising the Private Rented Sector really means for landlords.
The UK’s Private Rented Sector (PRS) is undergoing a comprehensive transformation. Historically lightly regulated, the PRS stands in contrast to the more structured Social Housing Sector.
Now, a wave of reforms is set to professionalise the PRS, reshaping the relationship between landlords and tenants. While these reforms are ambitious, the real story lies in how the sector will evolve once these changes take root.
Central to this agenda is the Renters’ Rights Bill, which introduces a range of measures designed to improve transparency and tenant protections. These include the creation of a PRS Landlord Ombudsman, a new mandatory redress scheme, and a PRS landlord database, aiming to bring the PRS closer to the regulatory standards of social housing, while offering tenants clearer routes to hold landlords to account.
Reform is likely to place additional strain on the overburdened County Court possession process.”
The abolition of “no-fault” evictions is perhaps the most headline-grabbing change. Intended to empower tenants to challenge poor practices without fear of retaliatory eviction, it requires landlords to prove in court that valid grounds for ending tenancies exist.
Consequently, this reform is likely to place additional strain on the overburdened County Court possession process, potentially leading to longer resolutions and frustration for both PRS landlords and tenants.
Further reforms, such as the extension of Awaab’s Law and the proposed Decent Homes Standard to the PRS, will set clearer expectations around safety and maintenance. The ongoing LAFRA 2024 service charge consultation proposes stronger leaseholder protections and mandatory qualifications for managing agents.
As managing agents play an increasingly key role in PRS operations, this could significantly improve service quality and address common frustrations surrounding poor communication and management.
What happens after these reforms come into force?
One immediate consequence is market consolidation. New requirements surrounding damp, mould, fire risk, and utilities safety may make the landscape untenable for smaller landlords, already squeezed by tax changes and rising costs. Many are expected to exit or shift to limited structures, while others may seek partnerships with professional agencies.
This trend is already visible, with the proportion of landlords operating through limited companies rising from 36% to 66% over the past five years. Institutional investors and larger landlords, however, are better positioned, with dedicated management teams and access to economies of scale.
The Rise of Build-to-Rent
The BTR sector is expanding rapidly, with Savills stating the UK’s BTR stock reached 127,000 homes in Q1 2025, with 50,000 under construction and 110,000 in planning. BTR currently makes up just 2% of the UK’s PRS, but its footprint is expanding and is central to Labour’s goal of delivering 300,000 new homes annually by the late 2020s. However, challenges remain that threaten delivery targets.
A Tightening Market and Rising Rents
The exit of smaller landlords and the slow pace of BTR development could lead to shortfalls in rental supply. Indeed, RICS are reporting a sustained decline in rental listings as “landlords continue to leave the sector”. Further, Zoopla notes a 21% increase in rents over the past three years.
Yet demand remains high, and without policies to boost delivery, the reforms risk deepening the affordability crisis. Rent controls remain politically contentious, but rising rents could undermine the protections the Bill seeks to establish. The Government is trying to strike a careful balance, supporting professionalisation while ensuring that housing supply keeps pace.
Adapting to a Reimagined PRS
Looking ahead, the PRS will be a more regulated space. Landlords will need to reassess their models, upgrade standards, and strengthen their processes. For tenants, the reforms offer the promise of safer, fairer housing. For the sector as a whole, they mark a new chapter, one that will require adaptability, investment, and shared commitment to raising standards.
Mark Foxcroft is a Partner and Head of Housing Management & Property Litigation at Devonshires.
“Professionalise” is a loaded term implying “better”, with scorn and claims of likely incompetence meted out to “amateurs” who only own a single or a few rental properties.
Alternatively, amateur or owner-landlords could be seen as more invested in their properties and inclined to look after them better. They often value their own time at zero – “it’s just part of the job” – and be willing to turn out at unsocial hours to solve a problem. “Professionalise” in contrast is code for “more expensive”: their staff expect to be paid professional salaries. they start at 9 and go home at 5pm, and they always use a tradesperson to fix a problem, even when it can easily be tackled by an owner-landlord on a DIY basis. The furniture and appliances are more likely to be up-to-date and replaced every 2-3 years rather than when it’s actually needed. All of this cost money and means a less attentive service for tenants. Rents will be pushed up to ensure the professional landlord make a designated profit margin, driven by their lenders or investors’ expectations.
Build-to-rent is a classic example of “professionalisation”. Those guys cherry-pick the easiest-to-manage tenants, in plumb locations near transport hubs, with all the new-build low-maintenance units and the expensive trophy gyms and games rooms in close proximity to a FM office. They aren’t going to take an interest in HMOs, or rental flatshares or houses scattered in cost-effective locations in the regional suburbs, or the difficulties of families on benefits and low pay.
In my humble opinion, the wave of reforms does not professionalise the PRS; it is aimed at winning hearts and votes. It will make renting more difficult for more tenants when the bill is out.
If it’s professional it needs to be recognised that mortgage interest is a charge by a third party supplier when the property is in your personal names.
And the chances of HMRC agreeing to this are zero. They’ve claimed rental properties are not businesses but “investments” for years; I wouldn’t be surprised if they ban the deductibility of mortgage costs for limited companies too, if your operation gets defined as a “residential investment company”.