Renters Rights Act Landlord Impact: Banks Now Devalue

The Renters’ Rights Act landlord impact has reached a point that most commentary has not caught up with: banks are now devaluing rental property on the basis that periodic tenancies provide no security of tenure. In this episode of the London Property Podcast, Farnaz Fazaipour is joined by Marc von Grundherr of Benham & Reeves — one of London’s most experienced lettings professionals — for a frank, detailed, and genuinely unfiltered conversation about what the Act is actually doing on the ground. From the upfront payment ban disrupting overseas student access, to the three-months-arrears trap for mortgaged landlords, to the non-dom retreat and planning gridlock that frame the whole picture, this is the conversation that serious London landlords, investors, and tenants need to hear.

The Renters’ Rights Act Landlord Impact Nobody Is Talking About: Banks Are Repricing

The most significant and least-discussed consequence of the Renters’ Rights Act landlord impact is what is happening in the lending market. Banks are beginning to factor the absence of fixed-term tenancy security into their valuations of build-to-rent properties.

Under the new framework, a tenant can leave on two months’ notice at any point. There is no fixed term. There is no security of tenure for the lender to underwrite against. Marc von Grundherr describes speaking directly with mortgage brokers who confirm that build-to-rent valuations are being adjusted downward as a result — and that some lenders are already restricting products to corporate lettings only.

For a mortgaged landlord, the practical consequence is stark. If a tenant stops paying after month one — having signed but before the landlord can take any upfront funds — the landlord must now wait three months before possession proceedings can begin. Three months of mortgage payments with no rental income. No buffer. No recourse. For landlords on tight margins, that exposure is not theoretical. It has already happened to at least one operator Marc knows of.

This compounds the Renters’ Rights Act landlord impact that was already in play from the loss of interest deductibility — which drove approximately 40% of leveraged landlords out of the market over the past decade. For our earlier analysis of how the Act is reshaping the prime London lettings market, read our post on Renters’ Rights Act landlords: the unfiltered street view. For the government’s official Renters’ Rights Act guidance, see gov.uk’s Renters’ Rights Act overview.

The Overseas Student Problem: Closing Access While Claiming to Help

One of the most revealing aspects of this conversation on Renters’ Rights Act landlord impact is the overseas student tenancy issue — and the government’s response when directly challenged on it.

Marc manages approximately 400 Chinese students across his group. They all come through education providers and introducers in China and historically paid a year’s rent upfront. That mechanism is now barred. Landlords cannot request upfront rent. Students cannot be asked to pay in advance. Professional guarantor companies — the workaround — cost the tenant three to four weeks’ rent, a sum that prices out young British people whose parents are themselves renting and cannot act as guarantors.

The deepest irony is the carve-out that Marc raised directly with a parliamentary under-secretary at an industry event, and later in writing: purpose-built student accommodation providers — Unite, Liberty Living, and their equivalents — can still demand rent upfront and offer fixed-term tenancies, because they lobbied successfully to be excluded from the Act. A private landlord letting to the same student in Chelsea cannot. The minister’s response when pressed: don’t rent to students in private accommodation. The Renters’ Rights Act landlord impact, in this corner of the market, is to make access harder for exactly the tenants it was designed to protect.

The Old Key-and-Deposit Sequence Is Gone — and the Risk Is Real

Marc describes one of the most practically significant changes in the Renters’ Rights Act landlord impact with characteristic directness: the old-fashioned tenancy sequence no longer exists.

Previously, a landlord would sign and date the tenancy agreement but not hand over keys until the deposit and first month’s rent had cleared. That sequencing gave the landlord a practical safeguard. Under the new framework, the tenancy is binding from signature. A tenant can turn up to the office, sign the agreement, and demand the keys — before a single penny has been received. The landlord must hand them over. If the tenant then fails to pay, the landlord must wait three months before possession proceedings can begin.

Marc is clear that this is not hypothetical. He is aware of at least one case where it has already happened. For anyone advising landlords on the Renters’ Rights Act landlord impact, this change in the practical sequencing of tenancy entry is among the most urgent things to understand and prepare for.

Where the Smart Money Is Moving: Above £2,000 a Week and Out of the Act’s Reach

The most practically useful section of this conversation covers where serious money is repositioning to navigate the Renters’ Rights Act landlord impact entirely.

Marc describes a client who has invested £120 million into 70 London buildings over the past 18 months. His model is specific and deliberately structured around the Act’s thresholds. He targets properties where the rent exceeds £2,000 a week — the level at which the Renters’ Rights Act does not apply in the same way. He buys corner buildings with commercial ground floors and residential above. He converts multi-flat buildings into large single residences. He completes pre-planning applications before exchange, with completion conditional on pre-planning approval. He accepts longer voids at the outset in exchange for tenants who commit for two, three, or four years.

His investment horizon is 20 years. He has two children who will inherit. He is not selling anything for profit. He pays what he agrees to pay and does not chip. His entire model has been built from first principles around the legislative reality rather than retrofitted to it.

For prime London investors navigating the Renters’ Rights Act landlord impact, the £2,000-a-week threshold is the most important number to understand. It is not a workaround. It is the line the Act itself draws. For our earlier analysis of how buy-to-let lending in London is responding to the new framework, read our post on buy-to-let lending London: what banks want from landlords now.

Non-Doms, VAT-Free Shopping and the Perfect Storm

The conversation broadens into the wider policy environment that frames the Renters’ Rights Act landlord impact — and Marc traces the beginning of London’s challenging period not to the Act itself but to the removal of VAT-free shopping for tourists under George Osborne.

Gulf families who used to take entire floors of prime London properties for a month in summer started coming for shorter periods. Then some stopped coming entirely. They did not stop spending — they spent in Paris, Madrid, and Geneva instead. And when they are not here, they are not eating in restaurants, taking taxis, staying in hotels, or thinking about London property.

The non-dom changes compounded this. Marc is unequivocal: the non-dom regime change removed people at the super-prime end of the market, and there is no political appetite to reverse it. The non-doms with London roots are desperate to come back. At the drop of a hat, given the right policy signal, they would. That signal has not come and, in Marc’s view, will not come anytime soon.

Planning Gridlock: The Deepest Structural Problem

Both Marc and Farnaz agree that beneath the Renters’ Rights Act landlord impact, the stamp duty burden, and the non-dom retreat, the deepest structural problem in UK property is planning.

An American investor Marc spoke with recently put it directly: there is money, there is demand, there is appetite. The biggest problem in this country is planning. The government’s announcement of 300 additional planning officers across the entire system amounts to roughly one additional officer per planning office. It will not move the needle.

The Peckham town centre example is instructive: a regeneration scheme with genuine public benefit, blocked because one proposed tower overlooked a clock tower of no particular historic significance. Berkeley said if they cannot get what they want, they will not build it. They own the land. They will take the income from existing tenants and sell when it suits them. That is a rational private sector response to an irrational planning environment — and it is playing out across dozens of schemes simultaneously.

For our earlier analysis of how planning permissions have hit a twenty-year low, read our post on prime London property owners: six stories this week.

What the Renters’ Rights Act Landlord Impact Means for You

The Renters’ Rights Act landlord impact is real, structural, and compounding. Banks are repricing. Students are losing access. Mortgaged landlords face a three-month arrears exposure with no buffer. And the investors navigating it best are those who understood the threshold, built their model around it, and stopped waiting for the policy environment to improve.

If you are a landlord, tenant, or investor trying to navigate the new landscape and would like to understand your options, get in touch for a no-obligation 15-minute conversation: ask@londonproperty.co.uk

Join the Conversation

Which side of the rental reform debate are you on — tenant protection or landlord flight? Have you encountered the three-month arrears risk, the overseas student access problem, or the bank repricing issue directly? Share your experience below and follow the London Property Podcast for more honest, unfiltered analysis from the sharp end of prime central London.

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