Tenant Reform - Our Advice to BTR Operators. Part 1 of 2.

TL;DR (Summary)
The upcoming tenant reform will introduce significant changes that will reshape the Build-to-Rent (BTR) sector for years to come. With increased tenant mobility, stricter rent increase regulations, and new rules on pets and evictions, the economics of BTR is about to change, and landlords must be proactive to stay ahead. Operators who refine their service offerings, implement data-driven pricing strategies, and maintain regulatory compliance will gain a competitive edge. As traditional agencies struggle to adapt, BTR landlords have a unique opportunity to enhance their positioning in the market. Given the level of detail surrounding these changes, we’ve created a series of posts devised to inform you how to protect your assets and drive long-term success.  In the first blog, we are looking at three changes and how best to navigate them - (1) the end of fixed-term ASTs, (2) the stricter rules on rent increases and (3) the tougher eviction rules.

Introduction

The UK rental market is on the verge of a seismic shift with the introduction of tenant reform laws. For BTR landlords and operators, the changes present both challenges and opportunities. To remain competitive, landlords must understand the key changes and take proactive steps to adjust their strategies.

Due to the level of complexities surrounding these changes, we’ve devised a series of informative guides to inform you how to protect your assets and drive long term success.  In this first blog, we are looking at the end of fixed-term ASTs, the strict changes to annual rent increase and the tougher eviction rules.

Change 1. The End of Fixed-Term ASTs

Potential Impact:

• Under the Renters Reform Bill, fixed-term tenancy agreements will be replaced with open-ended, periodic tenancies.
• The impact is likely to lead to greater income leakage, particularly in the initial transition period, due to increased tenant churn, customer support costs, and increased bad debt.
• Reduced appetite for student lets, as landlords prefer longer-term stability.
• Short-term rental premiums may erode due to the shift away from fixed terms

Our Advice

Prioritise Service Excellence.  
With tenants having the ability to leave at short notice, ensuring a seamless and high-quality living experience is paramount for retention.  Operators must shift from a transactional approach to a service-first mindset. This means offering rapid issue resolution, maintaining clear and proactive communication, and investing in technology that enhances the tenant experience.

Implementing tenant experience platforms that provide easy access to maintenance requests, community events, and real-time updates can foster stronger tenant relationships.  Moreover, fostering a sense of community - through exclusive resident events, shared amenities, and loyalty rewards - can increase tenant satisfaction and encourage long-term occupancy.

Crisis management must also be a core focus; for example, if a major building-wide issue occurs, such as prolonged Wi-Fi downtime, swift resolution and transparent communication will prevent mass notices being served.

Leverage Reputation.  
Tenant mobility increases the influence of online reviews, referrals, and overall brand perception. A strong reputation can drive occupancy rates just as much as pricing and location.  To stay ahead, operators must maintain impeccable service standards, ensuring properties are consistently well-maintained, move-in ready, and attractive to prospective tenants.

Encouraging positive reviews from satisfied tenants will enhance brand credibility, while transparent resolution of complaints can mitigate negative feedback.  Additionally, introducing incentives for long-term stays - such as gifting on annual anniversary dates, exclusive resident perks, or flexible lease extension options - can help stabilise occupancy and reduce churn.

Data-led tenant qualification.
To counteract the uncertainty brought by open-ended tenancies, operators should refine their tenant screening processes.  Traditional credit checks and references are no longer enough; behavioural data and leasing trends should be used to identify tenants who are likely to stay for the long term.

Understanding demographic trends, employment stability, and lifestyle preferences can help align marketing efforts to attract high-retention tenant groups.  Moreover, structuring leasing strategies around peak demand periods - such as adjusting pricing models seasonally or aligning short stays with high-demand months - can help minimise voids and turnover risks.

Monitor short-term tenancy providers.
Operators relying on serviced apartment providers for short-term occupancy solutions must reassess the viability of this model under the new regulations.  The removal of fixed terms could impact the financial stability of serviced accommodation providers, leading to disruptions in occupancy strategies.

Operators should conduct thorough due diligence on their providers, reviewing lease agreements to ensure flexibility and contingency plans are in place. Where feasible, bringing short-term letting operations in-house could provide greater control over pricing, occupancy, and overall revenue stability.

Diversifying leasing strategies - such as offering furnished units for corporate stays or introducing flexible co-living options - can also help mitigate risk.

By adopting data-driven pricing, enhanced tenant engagement, and a flexible leasing strategy, BTR operators can mitigate risk, boost retention, and outperform competitors in the evolving rental landscape.

Change 2. Stricter Rules on Rent Increases

Potential Impact:

• Rent can only be increased once per annum, with clear market evidence required.
• Tenants face no downside in challenging rent increases, increasing the likelihood of expensive dispute resolution.
• The early months of the reform will likely see a surge in tenant disputes over rent hikes.
• Dispute resolution processes impact on delayed rent increases is unclear.
• Traditional agencies are likely to try and justify expensive renewal fees by offering legal support in rent disputes.

Our Advice:

Take a measured approach.
Large BTR landlords should consider adopting a cautious approach in the initial stages of the reform.  Instead of engaging in potentially costly and time-consuming disputes, it may be prudent to observe how traditional agencies handle these cases and allow legal precedents to emerge before making aggressive rent adjustments. In other words, “sit this one out” while traditional agencies invest in the costly stage of establishing the market practices.

Use data driven pricing strategies.
One potential strategy is to implement a success-based Estimated Rental Value (ERV) approach, which involves tracking comparable market rents and making informed adjustments based on clear data.  By ensuring rent increases remain in line with market trends, landlords can reduce the risk of disputes while still achieving steady growth in rental income.
Operators should also prepare for a shift in how rent negotiations are conducted.  Tenants will become more informed and will scrutinise the rationale behind rent increases more closely.  To mitigate the risk of disputes, transparency will be key - providing clear, well-documented justifications will help reassure tenants and support any necessary increases.

Get pricing right from the start.  
The initial rent set at the offer stage impacts long-term asset performance. Overpricing leads to voids and forced reductions, while underpricing limits future growth. Align pricing with peak leasing periods, demand for specific unit types, and real-time market data to maximise ERVs and maintain steady rental growth.

Change 3. Tougher Eviction Rules

Potential Impact:

• Section 21 ‘no-fault’ evictions will be abolished.
• Landlords must provide a valid and specific reason for eviction.

Our Advice

Maintain clear tenant records.  
Thorough documentation will be essential in a stricter legal environment.  Landlords should keep detailed records of rent payments, maintenance requests, tenant complaints, and any breaches of lease terms. This documentation will serve as critical evidence if eviction proceedings become necessary. Implementing property management software can help track these records efficiently and ensure compliance with legal requirements.

Strengthen pre-tenancy screening.
Prevention is better than cure. Conducting robust pre-tenancy checks, including financial assessments, employment verification, and reference checks, can significantly reduce the risk of problematic tenants.  Operators should also consider using behavioural data to assess the likelihood of a tenant adhering to lease agreements and paying rent consistently.

Enforce lease terms early.
Addressing tenancy breaches promptly will be more important than ever.  If tenants fall into arrears or engage in antisocial behaviour, landlords should act immediately by issuing warnings, setting clear expectations, and documenting all communications.  A proactive approach reduces the risk of escalation and strengthens the legal basis for eviction if required.

Prepare for delays and costs.
The new regulations will likely lead to an increase in contested evictions, resulting in longer vacancy periods and higher legal costs. Operators should budget accordingly, explore mediation as an alternative to court proceedings, and seek early legal advice when issues arise. Having a contingency plan in place - such as a dedicated legal fund or alternative tenant retention strategies - will help mitigate financial and operational disruptions.

By staying proactive, implementing stringent tenant vetting, and maintaining compliance, BTR landlords can navigate the changing legal landscape effectively, reducing risk while maintaining strong occupancy levels.

How Home Made Can Help

With a deep understanding of the BTR market, Home Made offers tailored solutions to help landlords and operators navigate these reforms. Our expertise in tenant retention, operational efficiency, and compliance ensures you stay ahead in a rapidly evolving market.  Speak to our team to find out how we can help you adapt to the new rental landscape.

Check out Part 2 of our renter reform series for more of the proposed changes and how we recommend navigating them, and reach out to us directly at btr@home-made.com to understand how we can provide additional support.