UK Renters’ Rights Reform Bill Is Affecting First-Time Buyer Demand

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. Background: What Is the Renters’ Rights Act?

  • The Renters’ Rights Bill (now Act) received Royal Assent on 27 October 2025, becoming the Renters’ Rights Act. GOV.UK
  • Key reforms include: abolishing “no-fault” evictions under Section 21, ending fixed-term assured shorthold tenancies, replacing them with periodic tenancies, stronger possession grounds, and more security for tenants. House of Commons Library+2GOV.UK+2
  • Other tenant protections: limits on rent increases (once per year), ability to challenge them via tribunals, and a ban on “rental bidding” (landlords or agents can’t solicit offers above the listed rent). Hansard+1
  • The Act will also introduce a Decent Homes Standard for the private rented sector, giving local authorities enforcement powers. House of Commons Library+1
  • According to the government’s implementation roadmap, the first phase (abolishing section 21 and introducing assured periodic tenancies) kicks in on 1 May 2026. GOV.UK

2. Immediate Effects on the Rental Market

To understand how first-time buyer demand is affected, it helps to see what’s changing in the rental sector—and how landlords are reacting.

A. Increased Security for Renters

  • More secure and long-term tenancies make renting more attractive, especially for people who fear eviction.
  • With “no-fault” evictions gone, tenants may feel less pressure to become homeowners quickly just to gain stability.
  • This could delay some renters’ decisions to buy, reducing the urgency to enter the property ladder.

B. Potential Reduction in Rental Supply

  • Several industry commentators warn that the new legislation may prompt some landlords to exit the rental sector: stricter regulations, increased compliance costs, and slower property repossessions could make renting less profitable. Norton Rose Fulbright+1
  • If landlords leave, rental supply could shrink, potentially increasing rents (at least in the short term) or reducing options for renters. Fewer rental units may push more people to consider buying.
  • However, reduced rental supply could also exacerbate affordability issues for renters, making it harder for them to save for a deposit.

C. Impact on Rental Growth Dynamics

  • Under the Act, rent increases are limited to once per year, and tenants can challenge excessive increases. House of Commons Library
  • This may dampen landlords’ ability to raise rents aggressively, reducing revenue growth expectations on rental properties. Cushman & Wakefield suggests this could tighten profit margins for landlords. Cushman & Wakefield
  • More predictable rent increases, while positive for tenants, could lower the long-term financial appeal of buy-to-let investments.

3. How These Rental Changes Influence First-Time Buyer Demand

Now let’s connect the dots: how do these rental-sector reforms translate into demand shifts among first-time buyers (FTBs)?

A. Reduced Landlord Competition

  • With some landlords exiting, fewer buy-to-let investors may compete in the housing market.
  • According to Cushman & Wakefield, there’s a risk of a net loss in the PRS (private rented sector), which could lead to fewer buy-to-let properties. Cushman & Wakefield
  • This could free up more homes for first-time buyers, improving their chances to buy — especially in markets where investor demand drives up prices.

B. Shift from Renting to Buying

  • As renting becomes more stable but potentially less lucrative for landlords, some renters may start seeing the cost-benefit of buying more clearly.
  • According to industry commentary, demand for first-time buyers is rising: HQN Ltd reports that first-time buyer registrations now exceed tenant registrations in some regions. HQN
  • This suggests some renters are already pivoting to buying, possibly motivated by both rental reform and more favourable mortgage or housing policies.

C. Greater Affordability Pressure on First-Time Buyers

  • Even if rental demand shifts, first-time buyers still face affordability challenges (mortgages, deposits, etc.).
  • The reforms may not sufficiently lower entry barriers for buyers — the structural issues (housing supply, deposit size, mortgage availability) remain.
  • Nonetheless, changes in the rental sector could prompt more renters to try to buy, increasing competition in the first-time buyer space.

D. Incentives from Tax Policy & Budget Changes

  • The 2024 Autumn Budget raised stamp duty for second homes (i.e., buy-to-let) from 3% to 5%, which may discourage some landlords/investors and benefit first-time buyers. Anderson Wilde & Harris
  • According to parliamentary debates, this tax shift is expected to lead to 130,000 additional first-time buyer or primary-residence transactions over five years. Hansard
  • So, rental reforms + tax policy combined may be increasing the relative attractiveness of buying vs. investing in buy-to-let.

4. Risks & Challenges for First-Time Buyers Despite Reform

Even with potential benefits, first-time buyers could still face headwinds tied to this reform:

  1. Supply Constraints
    • If fewer landlords operate, demand for homes to buy may rise, but housing supply doesn’t necessarily increase. Without enough new homes, prices could still climb.
    • Savills forecasts suggest limited new homebuilding in the coming years, which could restrict meaningful gains for FTBs. Local Government Lawyer
  2. Higher Rents Initially
    • Some landlords may preemptively raise rents to “lock in” value before reforms fully take effect, or to compensate for increased regulation.
    • As reported in landlord commentary, there’s concern about void risk and cost of regulation, which could be passed to tenants. Norton Rose Fulbright
    • Higher rents could make it harder for renters to save for deposits.
  3. Longer-Term Crime or Disputes
    • More tenant protections and stronger enforcement mean dispute risk increases, which may make some landlords cautious — potentially reducing supply.
    • Also, landlords need to keep properties in better shape under the Decent Homes standard. That could raise maintenance or upgrade costs, possibly passed to tenants.
  4. Slow Transition & Uncertainty
    • The reforms are being phased: for example, the first phase begins in May 2026. GOV.UK
    • During this transition, some landlords might wait-and-see, limiting immediate supply shifts.
    • Uncertainty among landlords and investors may dampen the expected surge in housing market changes.

5. Strategic Implications for First-Time Buyers

Given this evolving environment, what should first-time buyers (or prospective buyers) be thinking?

  • Monitor the Reform Rollout: Understand when different parts of the Act come into force—especially the May 2026 changes. GOV.UK
  • Consider Timing: Some renters may decide to buy in anticipation of reduced competition or shifting market dynamics.
  • Use a Broker or Advisor: As more renters may transition to buyers, competition could tighten; professional advice helps.
  • Leverage Government Schemes: If landlords exit and supply tightens, taking advantage of schemes like Shared Ownership, Lifetime ISAs, or 95% mortgage guarantees becomes even more important.
  • Budget for Cost Changes: Higher compliance costs for landlords could translate into higher rents or, potentially, higher house prices in some markets—but also more negotiation room if demand shifts.

6. Outlook: Long-Term Effects on First-Time Buyer Demand

Putting everything together, here are some likely long-term outcomes (with risks):

  • Moderate Increase in FTB Demand: Over time, more renters could convert to buyers due to reduced landlord appeal and increased rental risk.
  • Potential Tightening of Rental Supply: If many landlords exit, rental stock could shrink. This may force more people into homeownership or increase rent further, depending on housing construction.
  • Greater Pressure on Affordable Housing: Without scaling up new builds, first-time buyers may compete more fiercely for affordable properties.
  • Shift in Landlord Profile: More institutional landlords (rather than individuals) may dominate, impacting local markets and possibly raising costs.
  • Change in Investor Strategy: Investors might prefer build-to-rent developments with professional management to adapt to regulatory risks.

Conclusion

The Renters’ Rights Act represents a major transformation in the UK’s private rental sector. By abolishing no-fault evictions, stabilizing rents, ending rental bidding wars, and enforcing minimum property standards, the Act strengthens tenant security—but also introduces significant regulatory burdens for landlords.

For first-time buyers, these changes could shift the balance in their favour in certain ways: reduced buy-to-let competition, more renters looking to buy, and potential tax incentives. Yet, challenges remain: supply constraints, the cost of deposits, and economic uncertainty could limit the immediate positive impact.

In short, the Act is not a silver bullet for first-time buyer affordability. But combined with other housing and tax reforms, it does reshape the dynamics in a way that could benefit many who currently rent, especially over the medium to long term.

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