Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Landlords Delay Selling Prime Properties Despite Renters’ Rights Act

A Savills survey of over 230 landlords with prime properties found that only 11% have sold a rental property since the Renters’ Rights Act came into force on 1 May. While the legislation has prompted some landlords to reconsider their portfolios, the majority have not yet taken action.

The survey revealed that 21% of landlords said they were more likely to sell within the next three months, rising to 27% over six months. Looking further ahead, 46% reported being more likely to sell within the next 12 months, and 68% over 24 months, indicating a more cautious long-term outlook.

Investment Plans and Portfolio Management

Savills also found that landlords are increasingly hesitant to expand their portfolios. According to the survey, 62% of landlords are significantly less likely to purchase another investment property in the next two years, with a further 10% somewhat less likely. Only 5% said they were more likely to buy, while 23% expected no change to their plans.

The impact of the Renters’ Rights Act has been greater than many landlords anticipated. 39% said the reality had been worse than expected, compared to 5% who said it had been better. More than a third of landlords have already changed how they manage their portfolios in response to the legislation, and 24% said they are not confident they understand their responsibilities under the Act.

Rental Demand and Market Trends

Despite landlord caution, rental values continue to rise across much of the prime sector. Savills’ analysis shows that limited supply and sustained tenant demand have supported rental growth, especially among smaller properties in commuter belt locations. Over the past decade, prime one- and two-bedroom properties in these areas recorded the strongest rental growth, with rents rising by 38.7%. Three-bedroom homes saw 32.7% growth, and four-bedroom properties 27.2%. Larger homes experienced more modest increases, with five-bedroom properties up 13.7% and six-bedroom-plus properties up 4.1% over ten years.

Regional Performance

Prime Central London has seen more muted rental growth, with rents increasing by 0.4% in the quarter and standing 1.5% higher year-on-year. There is a divide between properties above and below the £100,000 annual rental threshold, which affects whether a tenancy falls within the scope of the Renters’ Rights Act. Outer prime London markets have generally performed better. In South West London, rents increased by 1.2% during the second quarter, with annual growth at 2.5%. Growth varied by property type and price point, ranging from 3.2% for homes let at less than £500 per week to 1.2% for those above £3,000 per week.

The findings indicate that while landlords remain cautious about future investment, demand for well-located smaller rental properties continues to support rental growth across the prime market.