Renters’ Rights Bill and Buy to Let Mortgages

With the Renters’ Rights Bill just around the corner now, what impact will the Bill have on buy to let mortgages? Here, we look at what changes lenders are planning once the Bill is passed. 

The conversation surrounding the Renters’ Rights Bill has always centred on the legislative changes we can expect; however, a shift has emerged as we approach its full implementation. Growing numbers of clients are calling us to discuss what it will mean more specifically for buy to let finance. Most notably, what the abolishment of Section 21 and ASTs will mean for buy to let lending. 

The key concerns

ASTs and Section 21 represent key pillars within the current buy to let space. But, with a move to periodic tenancies that threatens landlords’ long-term rental stability, and the abolishment of Section 21 evictions, many landlords worry that affordability checks will become further constrained. 

Mortgage lender sentiment 

However, our ongoing discussions with lenders show that, as it stands, they’re not planning on making any changes to their criteria. Instead, they note that as part of their underwriting, they already check landlords’ ability to cover rental void periods and that one of the key reasons for removing Section 21 was to give tenants more security of tenure. Therefore, lenders don’t expect tenants to suddenly leave their homes within a couple of months of taking them. 

Looking ahead

While we’re in the later stages of the Bill’s parliamentary processes, nothing is set in stone just yet. Once the reforms are implemented, lenders may need to make necessary criteria changes. 

These changes could be triggered by increased mortgage payment arrears, longer rental void periods, or shifts in tenant behaviour that impact landlords’ ability to pay their mortgages. Consequently, landlords will need to monitor trend changes once the Bill has passed to stay ahead. 

This may feel daunting, but it’s important to remember that lenders have a keen appetite for buy to let lending and are constantly reviewing their criteria to better support landlords. If anything, once the Bill is passed, I anticipate we can expect a ‘teething period’ as the industry adjusts to the new normal, which will apply to both mortgage lenders and landlords. 

What this means for buy to let 

Undoubtedly, the Renters’ Rights Bill will create uncertainty and challenges for landlords to navigate. With so many changes that will reshape the very structure of buy to let as we know it, landlords will need the support of industry professionals to understand their new obligations and next steps. 

However, with SWAP rates steady and no further Base Rate cuts expected until 2026, buy to let mortgage pricing remains stable. Lenders are not acting prematurely to legislative changes, and are instead constantly reviewing their mortgage products, with many competitive fixed-rate deals available now.   

The Bill will certainly mark a new era of buy to let, and there’s a long way to go until landlords can come to grips with what this will look like, but one thing they can fall back on now is a sense of calm and security in the mortgage market.