Renters’ Rights Act Risks Locking Out ‘Vulnerable Tenants’

Why It Matters

Reduced access for vulnerable renters could deepen the UK housing shortage and accelerate rent inflation, reshaping the rental market’s risk profile. Policymakers must balance tenant protections with the need to keep affordable housing available.

Key Takeaways

• Landlords likely to tighten tenant screening under new Act
• Advance rent payments barred, hurting low‑credit renters
• Paragon holds $18 bn mortgage book, serving 47k landlords
• Hobby landlords exiting, shrinking rental supply and raising rents
• Vulnerable tenants face higher barriers to secure homes

Pulse Analysis

The Renters’ Rights Act aims to standardise tenancy agreements and give renters stronger legal standing, but its implementation introduces heavier compliance burdens for landlords. New reporting obligations, tighter eviction controls and the prohibition of advance‑rent payments force property owners to reassess risk exposure. As a result, many landlords are expected to adopt more stringent due‑diligence practices, scrutinising credit histories, employment status and income sources more closely than before.

For tenants on low incomes or receiving universal credit, the changes pose a concrete hurdle. Previously, paying several months’ rent up front could offset a poor credit record, but the Act removes that safety valve. Consequently, renters with limited credit histories or irregular employment may find themselves excluded from the market, exacerbating existing inequities. Industry voices, such as Paragon’s mortgage chief, argue that the legislation could unintentionally create a two‑tier system where only financially robust applicants secure housing.

The broader market impact is already visible. A growing number of hobby landlords are exiting the sector, citing the increased administrative load and reduced profitability. This retreat tightens the already scarce rental supply, especially in high‑demand areas like London, pushing rents higher and putting additional pressure on vulnerable households. Policymakers will need to monitor these dynamics closely and consider complementary measures—such as targeted incentives for affordable‑housing providers—to ensure the Act’s protective intent does not undermine overall housing accessibility.