Landlords are becoming more cautious when selecting tenants and increasing rents as rising operating expenses and new regulations put further pressure on the private rental sector, according to new research.
The report also found that some landlords are delaying property upgrades, despite many still planning to expand their portfolios and purchase additional homes.
The findings come from Handelsbanken’s fifth annual Property Investor Report, which surveyed 200 UK property investors, landlords and property management professionals.
The research revealed that 63% of respondents had raised rents due to increasing costs linked to running their properties.
Rising Costs Influence Landlord Decisions
Handelsbanken’s chief economist, James Sproule, said the private rental sector is becoming increasingly challenging for landlords to operate, leading investors to take a more selective approach.
He explained that higher expenses and increased tenant protections are influencing rental decisions, while also changing how professional landlords assess tenant affordability, risk and future portfolio strategies.
For renters, this could mean that affordability is not the only challenge, as competition for suitable rental homes may also become stronger.
Sproule added that while improved standards and stronger tenant protections are designed to create a better rental market, they also bring additional costs that landlords are already responding to.
Landlords Become More Selective
Following the introduction of the Renters’ Rights Act, 59% of landlords surveyed said they had become stricter with tenant selection, while 44% said they were considering bringing forward rent increases.
Maintenance and repair costs were the most common area where landlords saw increases over the past year, with 45% reporting higher expenses.
Other rising costs included insurance premiums, reported by 41% of respondents, and energy efficiency improvements, highlighted by 40%.
The financial pressures have also influenced portfolio decisions. Around 20% of investors said they had sold properties because of rising costs, while 19% had removed properties from the private rented sector.
Meanwhile, 46% said they had postponed planned upgrades or improvement projects.
Cost of Meeting New Regulations
The report found that the median cost of complying with the Renters’ Rights Act was £5,000, although the average reported cost was significantly higher at £31,411.
Looking ahead, landlords expected to spend a median amount of £20,000 over the next 12 months on compliance measures and property improvements.
Handelsbanken clarified that these figures represent spending across professional property portfolios and should not be viewed as a direct cost increase for individual tenants.
Investors Still Plan Portfolio Growth
Despite some landlords selling properties or reducing their involvement in the rental market, the majority of professional investors remain confident.
A total of 84% of respondents said they plan to expand their property holdings over the next year, a significant rise compared with 54% recorded in Handelsbanken’s previous survey in 2025.
The findings suggest that while rising costs and regulation are changing landlord behaviour, many investors still see opportunities within the UK property market.
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