Some prospective tenants are in danger of becoming “unlettable” as landlords tighten their risk controls, according to Legalforlandlords.

The Renters’ Rights Act is designed to strengthen protections for tenants and create a more secure, stable rental environment. However, in doing so, it is also prompting landlords to reassess their exposure to risk, particularly in areas where their ability to respond to non-payment or regain possession may be constrained.

The central issue is not that these individuals are legally barred from renting. Rather, it is that landlords, faced with the removal of key safeguards and an increase in possession risk, are likely to price that risk into their decision-making. As a result, affordability and financial resilience are set to become the primary filters through which applicants are assessed.

The removal of no-fault eviction powers, combined with ongoing court delays, is expected to make it more difficult and time-consuming for landlords to regain possession of their properties in cases of non-payment. Periodic tenancies will also reduce landlords’ control over tenancy structure. Together, these changes materially increase both the duration and cost of resolving disputes, encouraging a more cautious and selective approach at the point of letting.

Tenants getting squeezed out

In this environment, a range of tenants may find themselves squeezed out. Those earning below roughly two and a half to three times the annual rent, applicants with irregular or non-traditional income, students without strong guarantors, individuals with impaired credit histories, and benefit recipients are all likely to face greater scrutiny. While discrimination rules may tighten, commercial risk assessments are also expected to harden.

LegalforLandlords has identified several emerging pressure points that could define the post-reform market.

Referencing processes are likely to become both stricter and slower, increasing the risk of failed applications at a late stage. This may lead to longer void periods and higher administrative costs, with letting agents pre-filtering applicants more aggressively and reducing the number of viewings per property.

In turn, tenants who meet enhanced criteria will secure homes more quickly, while others may find themselves repeatedly rejected.

Affordability thresholds are also expected to rise, with many landlords shifting from traditional benchmarks of around two and a half-times rent to three-times or more. In higher-cost areas such as London, this change alone could exclude a substantial portion of otherwise viable tenants, creating the perception of overpriced stock when, in reality, fewer applicants meet the revised criteria.

Increased reliance of guarantors

At the same time, reliance on guarantors is set to increase. For many tenants who fall short on affordability metrics, a guarantor will become essential rather than optional. Yet access to suitable guarantors is uneven, and additional complications arise where guarantors are based overseas or fail referencing checks. Transactions may therefore collapse later in the process, adding further friction to the system.

The use of rent in advance, historically a mechanism to offset weaker financial profiles, is also under growing scrutiny. Regulatory and ethical concerns may limit its use in practice, removing another pathway for tenants who do not meet standard affordability thresholds.

Insurance and compliance requirements are tightening in parallel. Rent guarantee insurance products are likely to involve more rigorous underwriting, while broader obligations relating to energy performance, safety certification, and redress schemes continue to expand. This further reinforces a more conservative stance among landlords.

A market defined by qualified demand

According to LegalforLandlords, the wider challenge is not a lack of demand but a mismatch between demand and eligibility.

There is no shortage of renters, but there is an increasing shortage of renters who can pass affordability checks, satisfy referencing criteria and meet insurer requirements simultaneously. This creates a form of hidden vacancy risk, where properties appear to be in high demand but remain unlet due to repeated application failures.

As a result, the role of letting agents is evolving. Agents are becoming risk managers as much as intermediaries, focusing on screening optimisation, compliance oversight and advisory services designed to mitigate landlord exposure.

The Renters’ Rights Act will not reduce demand for rental housing, but it will raise the bar for what constitutes an acceptable tenant. The likely outcome is a larger pool of applicants who are technically eligible to rent, yet unable to secure a property in practice.

This growing cohort of “unlettable” tenants risks increasing friction across the lettings process and reshaping access to the private rented sector in the years ahead.

Sim Sekhon, Group CEO at LegalForLandlords, said: “The intention behind the Renters’ Rights Act is clear and, in many respects, necessary. It aims to create a fairer, more secure rental market for tenants. However, as with any significant regulatory shift, there are knock-on effects that cannot be ignored.

“What we are seeing is a natural recalibration. As landlords lose certain safeguards, many will look to mitigate risk elsewhere, most commonly through stricter affordability criteria. The challenge is that this can unintentionally exclude otherwise reliable tenants who may fall just short on paper.

“The solution lies in balance. We need to ensure landlords feel protected, but not at the expense of shutting out large sections of renters. That is where more innovative, proportionate approaches to risk, whether through better referencing, insurance-backed products, or greater regulatory clarity, will play a crucial role in keeping the market functioning for everyone.” Tags: Legal & Compliance, Landlords, Letting Agents