Blog Post: Tenant Reform - Our Advice to BTR Operators. Part 2 of 2

TL;DR (Summary)
The new rental reform will reshape the market, requiring BTR landlords to rethink their approach. Check out Part 1 for additional changes and our thoughts.  With pet bans lifted, operators must introduce clear pet policies and durable property upgrades. Restrictions on upfront payments mean smarter tenant screening and alternative deposit solutions are essential. These changes will drive market consolidation, rental inflation, and increased compliance pressure. BTR landlords who adapt quickly with proactive strategies will stay competitive - Home Made is here to help you navigate the shift.

Introduction

The rental market is on the brink of major regulatory changes, and Build-to-Rent (BTR) operators must be ready to adapt. From new pet policies to restrictions on upfront payments, these reforms will impact leasing strategies, tenant selection, and overall property management.

In Part 1 we covered some of the major changes, including the end of fixed-term ASTs, the strict changes to annual rent increase and the tougher eviction rules.  In this blog, we break down more key changes, explore their potential impact, and offer actionable advice to help BTR landlords navigate this shifting landscape. By implementing smart policies, strategic upgrades, and data-driven decision-making, operators can turn these challenges into opportunities—ensuring high tenant satisfaction, financial security, and long-term portfolio success.

Change 4. Pets Allowed by Default

Potential Impact:

• Landlords can no longer impose blanket pet bans.
• Additional wear and tear costs will rise.
• Pet licensing fees could be challenged.

Our Advice:

Introduce Pet-Friendly and Pet-Free Zones.
Designating pet-friendly and pet-free areas within a development helps create a balanced living environment that accommodates all tenants. This approach minimises conflicts between pet owners and those with allergies or concerns about animals, leading to higher tenant satisfaction and retention. Clearly outlining these zones in property listings and lease agreements ensures that prospective renters understand the community layout and pet policies before moving in.

Implement Robust Pet Policies.
While landlords cannot impose outright pet bans, they can implement structured pet policies to ensure responsible pet ownership. A well-defined pet agreement should outline expectations regarding noise control, waste disposal, and potential damage responsibilities. Establishing clear rules around acceptable pet breeds, sizes, and behaviour will help manage risks and maintain a harmonious living environment. Property managers should also have a plan in place to address policy violations fairly and consistently.

Adjust Maintenance Budgets and Cycles.
Properties with pet-friendly policies must anticipate higher levels of wear and tear. Adjusting maintenance schedules to include more frequent deep cleaning, carpet replacements, and common area upkeep can help maintain property value. Where permitted, landlords may also introduce pet deposits or damage clauses to offset potential costs. Proactive planning ensures that properties remain well-maintained while accommodating pet owners.

Upgrade Flooring and Fixtures in Pet-Friendly Units.
Investing in durable, pet-friendly materials can help mitigate the impact of pets on a property. Scratch-resistant flooring, stain-resistant carpets, and easily cleanable wall finishes reduce maintenance costs and increase unit longevity. Additionally, reinforced doors and trim can prevent damage from energetic pets. These upgrades not only improve the tenant experience but also lead to long-term savings for property owners.

Provide On-Site Pet Amenities.
Offering pet-friendly amenities can be a major selling point for prospective renters. Features such as dog-washing stations, pet relief areas, and dedicated pet play zones enhance the appeal of a development and can contribute to tenant satisfaction. Additionally, forming partnerships with local pet services, such as grooming and pet-sitting providers, can add further value and convenience for pet-owning tenants.

By implementing designated pet-friendly zones, establishing clear pet policies, and making strategic property upgrades, BTR landlords can attract pet owners while maintaining a well-balanced living environment. A proactive approach to maintenance and amenities ensures that properties remain desirable, fostering long-term tenant retention and overall asset value.

Change 5. Restrictions on Upfront Payments

Potential Impact:

• Tenants cannot be forced to offer large upfront payments to secure a tenancy.
• Higher risk of bad debt with high-risk demographics e.g. students, first time-movers to the UK, etc .
• Some landlords may become more selective, leaving such groups with limited housing options.

Our Advice:

Refine Underwriting Criteria.
A data-driven approach to tenant screening helps assess income stability, rental history, and affordability more accurately. Traditional payslips and credit checks may not provide a full picture of a tenant’s financial health, so incorporating open banking insights can offer a deeper understanding of spending habits, savings levels, and overall financial stability. Using rent-to-income ratios to establish realistic affordability thresholds ensures tenants can sustain rental payments long-term. Leveraging AI-driven risk assessment tools and historical rental data can further refine decision-making, reducing arrears and eviction risks.

Strengthen Guarantor Policies.
Expanding guarantor options can provide additional financial security for landlords, particularly when tenants have limited rental history or non-traditional income streams. Allowing corporate guarantors, international sponsors, or institutional schemes can offer a safety net for landlords while giving tenants more flexibility. This approach is especially beneficial in markets with high numbers of international renters, students, or freelancers. Clearly outlining guarantor obligations in lease agreements ensures transparency and minimises potential disputes.

Offer Alternative Deposit Solutions.
Traditional security deposits can be a financial barrier for many renters. By offering deposit replacement schemes, landlords can make renting more accessible while still protecting their assets. Insurance-backed rental guarantees can cover defaults and damages, providing landlords with financial security without requiring large upfront payments from tenants. These solutions can enhance tenant affordability and attract a broader demographic, particularly younger renters or those relocating from abroad.

Adjust Tenant Segmentation Strategy.
A tailored approach to tenant segmentation can help maintain occupancy levels and reduce vacancy risks. If targeting students or first-time movers, implementing flexible payment plans or co-signer options can make renting more feasible. Working with relocation agencies allows landlords to tap into a pool of high-quality, pre-vetted international tenants who are often willing to commit to longer leases. Additionally, offering bespoke leasing terms, such as rolling contracts or adjusted move-in schedules, can help accommodate different renter profiles and improve tenant retention.

By adapting underwriting and tenant qualification strategies, BTR landlords can expand their renter pool while mitigating financial risk. Incorporating flexible financial assessments, enhancing guarantor policies, and offering alternative deposit solutions will not only support sustainable occupancy rates but also create a more inclusive and competitive rental offering.

Wider Market Impact

• Increased pressure on traditional agencies. Renewal fees may become harder to justify, leading to cost restructuring, which ultimately will be passed on to a landlord or operator.
• Market consolidation. Small agencies struggling with increased administrative burdens may exit the sector.
• Rent inflation. More private landlords may leave the market, reducing supply and driving rental growth.
• Compliance enforcement. Unregulated landlords will face greater scrutiny, pushing tenants toward professionally managed BTR developments.

Final Thoughts

The upcoming reforms will reshape the rental market, and BTR landlords who adapt quickly will gain a competitive edge. Operators must enhance service quality, optimise pricing strategies, and ensure regulatory compliance to protect their assets and drive long-term growth.

Is your BTR portfolio prepared for these changes? Get in touch to discuss how Home Made can help you stay ahead of the curve.  Contact btr@home-made.com for more information.