When Protecting Tenants Makes It Harder to Become One

In Part One, we looked beyond the statistics at the individual tragedies represented by Britain’s homelessness crisis.

We also looked at an uncomfortable fact: the private rental market and homelessness are deeply interconnected.

That raises another question.

What happens when government intervention designed to protect tenants changes the willingness of landlords to provide homes, or changes who they’re prepared to provide them to?

This isn’t an argument against tenant protection.

It’s an argument about incentives.

Landlords aren’t a fixed resource

Political discussion often treats the number of private landlords as essentially fixed.

Government changes the rules. Landlords comply. Tenants receive greater protection.

But there is another option available to a landlord.

They can sell.

The Government’s own English Private Landlord Survey provides some particularly interesting evidence.

Almost one third of landlords surveyed in 2024 planned to reduce the number of properties they rented, including 16% who intended to sell all of them.

Among landlords planning to reduce their portfolios, 66% cited recent tax and legislative changes, while 44% cited forthcoming legislative changes.

Again, this needs careful interpretation.

An intention to sell isn’t the same as actually selling. A rental property sold to another landlord remains a rental property. And regulation is far from the only consideration: mortgage rates, property values, maintenance costs, retirement and investment returns all influence these decisions.

But the direction of travel is difficult to ignore.

In 2018, 75% of landlords said they would re-let a property when it next became vacant.

By 2021 that was 68%.

By 2024 it was 59%.

Government can regulate the people supplying rental homes.

It cannot force them to continue supplying them.

And then there is the landlord who stays

This may actually be the more important unintended consequence.

Imagine a landlord has ten applicants for a property.

Applicant A has a permanent professional job, two incomes within the household, substantial savings, excellent references and an impeccable credit history.

Applicant B can afford the rent but is self-employed, has limited savings and previously experienced financial difficulty.

If something goes badly wrong, which tenancy represents greater risk?

Now increase the cost, time and uncertainty associated with resolving that tenancy.

Has Applicant B become more attractive or less attractive?

The answer isn’t particularly complicated.

As the consequences of getting tenant selection wrong increase, so does the incentive to select the lowest-risk tenant.

And there is evidence of precisely this kind of thinking in the Government’s landlord research.

Among landlords unwilling to rent to households receiving housing support, 65% cited concern that benefits might not cover the full rent.

But particularly interestingly, 59% cited greater perceived risk arising from plans to remove Section 21 — up from 50% in 2021.

This isn’t theoretical economic modelling.

It is landlords explicitly telling government that changes to their ability to recover a property influence how they perceive the risk associated with prospective tenants.

Who loses when landlords become more selective?

This is where an apparently sensible risk-management decision meets the human consequences we discussed in Part One.

The applicants most likely to look risky on paper can include:

These characteristics don’t make somebody a bad tenant.

A self-employed person can be an exceptional tenant. Someone receiving housing support can pay every month for decades. A divorced parent can have impeccable finances.

But competitive rental markets don’t require landlords to conclude that somebody is a bad tenant.

They only require another applicant to appear slightly safer.

That’s an enormously important distinction.

Regulation can therefore have two very different effects

When the perceived risk of providing a rental property increases, landlords essentially have two ways of reducing their exposure.

1. Exit

Sell the property or invest the capital elsewhere. The potential consequence is fewer properties available to rent and greater competition for those remaining.

2. Selectivity

Remain a landlord but apply increasingly conservative criteria when choosing tenants. The potential consequence is that households with more complicated circumstances find accessing housing increasingly difficult.

The first affects supply.

The second affects access.

And both can ultimately affect homelessness.

The policy paradox

This creates an uncomfortable possibility.

We may make an existing tenancy safer while simultaneously making the next tenancy harder to obtain.

Consider possession reform. Giving tenants greater security has an obvious social benefit.

But if a landlord believes recovering their property when something genuinely goes wrong will become substantially more difficult, the value of avoiding a problematic tenancy increases.

The landlord doesn’t need to oppose the legislation.

They simply adjust their behaviour.

Stronger references.

Higher income requirements.

A guarantor.

Rent in advance.

Preference for two professional incomes.

Avoidance of applicants whose circumstances appear complicated.

Interestingly, the 2024 English Private Landlord Survey found 36% of landlords asked for rent in advance and 14% asked for a guarantor.

Each requirement may be perfectly rational from the landlord’s perspective.

But every additional hurdle potentially removes somebody from the pool of people capable of accessing that home.

Housing is a system

This is the mistake policymakers repeatedly risk making. Housing policy can’t be evaluated one intervention at a time.

Increase tenant protection and something else may change.

Increase taxation and investment behaviour may change.

Control rents and investment decisions may change.

Increase compliance costs and operating economics may change.

Make possession less predictable and tenant-selection behaviour may change.

None of this means those interventions are necessarily wrong.

It means they aren’t free.

Every intervention creates incentives, costs and behavioural responses elsewhere in the system.

And when rental supply is already constrained, those second-order consequences become particularly important.

What would success actually look like?

The answer isn’t a return to poorly regulated renting. Good landlords shouldn’t fear good regulation.

Tenants should have safe homes. Maintenance should be completed promptly. Communication should be effective. Deposits should be protected. Vulnerable tenants should receive appropriate support. Bad landlords should face meaningful consequences.

But good tenants also need landlords willing to provide them with homes.

Housing policy therefore needs to balance security with supply and protection with access.

At Nestsen, this is particularly interesting because technology offers another way to reduce some of the risk within the system without simply transferring it from one participant to another.

Better maintenance triage can stop minor problems becoming expensive ones.

Better communication can prevent misunderstandings escalating.

Better documentation creates accountability.

Earlier intervention can identify problems before they become crises.

Better coordination between tenants, property managers, landlords and tradespeople reduces friction for everybody.

Good property management should make being a tenant better. It should also make providing that tenancy easier and less risky.

That is an important distinction.

Because ultimately the objective isn’t to create the world’s most heavily protected tenancy.

It’s to create a housing system in which as many people as possible have a safe, secure place to call home.

Behind the homelessness statistics in Part One are tens of thousands of individual people.

So when we introduce another housing intervention, perhaps there are two questions policymakers should always have to answer.

How does this protect the person who already has a home?

And equally:

How does this affect the chances of the next person being offered one?

Because the greatest unintended consequence of housing policy may not be the landlord who serves notice today.

It may be the landlord who decides there won’t be a tenancy tomorrow — or who decides that the person most in need of one represents a risk they are no longer willing to take.

Sources

Ministry of Housing, Communities and Local Government — English Private Landlord Survey 2024

Ministry of Housing, Communities and Local Government — Statutory Homelessness in England: January to March 2026

Scottish Government — housing and homelessness statistics.