The number of homes being listed for sale with tenants in situ has fallen by almost 44% over the last two years as landlords become increasingly cautious about inheriting tenants amid major rental sector reform, research from Propoly reveals.
Analysis of residential listings data across Britain found there are currently an estimated 6,973 properties on the market with existing tenants in place, down 43.9% from 12,423 two years ago.
The figures suggest landlords are becoming far more selective when purchasing investment property following the introduction of the Renters’ Rights Act, which has significantly strengthened tenant protections and reduced landlord flexibility once a tenancy is established.
The South East has seen the sharpest regional decline, with the number of in situ listings falling by 60% over the last two years. Yorkshire & Humber recorded a 56.3% drop, followed by the East of England at 54.9%, the East Midlands at 54.2%, and the West Midlands at 53.5%.
RENTERS’ RIGHTS ACT
Despite the decline, the North West currently accounts for the largest share of in situ listings nationally, with 1,909 properties on the market representing 27.4% of the national total. The region’s large concentration of buy-to-let stock is believed to be driving activity.
The South East accounts for 11.2% of all in situ properties currently listed for sale, followed by Yorkshire & Humber at 11.1%, the East Midlands at 10.4%, and the West Midlands at 8.8%.
London and Scotland currently represent the smallest proportion of tenant-in-situ listings, accounting for just 3% and 3.7% of the national total respectively.
The findings come amid growing debate around the long-term impact of the Renters’ Rights Act on landlord behaviour and investment across the private rented sector.
While some parts of the industry have warned of a wider landlord exodus, Propoly says the latest figures point to a more nuanced shift in investment strategy.
GREATER CONTROL
Industry observers have increasingly pointed to the way rental reform is influencing landlord purchasing behaviour, particularly around risk, compliance and tenant management.
Under the Renters’ Rights Act, Section 21 ‘no fault’ evictions are being abolished, periodic tenancies are becoming standard and landlords face greater scrutiny around property standards and tenant protections.
As a result, many investors are thought to be prioritising vacant possession purchases, allowing them to reference tenants directly and retain greater control over tenancy agreements from the outset.
CHANGING INVESTMENT LANDSCAPE
Sim Sekhon (main picture, inset), Group CEO at Propoly, says: “At first glance, this decline suggests that fewer landlords are selling up and leaving the market altogether, which challenges some of the wider narrative around a mass landlord exodus.
“However, the more significant shift is in landlord appetite when it comes to taking on tenants already in situ.
“The Renters’ Rights Act has created a market where landlords face greater long term exposure and less flexibility once a tenant is in place, which naturally makes investors more cautious about inheriting occupants they have not personally vetted themselves.
“What this data really highlights is a changing investment landscape across the rental sector. Landlords are becoming far more selective about the properties they purchase, and many are increasingly reluctant to take on existing tenants without having carried out their own referencing and due diligence process.”
