Who would have thought, this time last year, that the Tenants Bill of Rights would be the one sure thing in the mortgage market in 2026?
The first phase of implementation introduces some of the most significant structural changes the private rented sector (PRS) has seen for many years, including: the abolition of Section 21 ‘no-fault’ evictions; expanding the grounds for Section 8 reinstatement; compulsory periodic employment; strong employer protections and anti-discrimination laws; and the expansion of tenants’ rights, including the right to ask for pets.
This first stage is facing a big problem in this field. Supporting your customers with new directions will be important. However, what impact, if any, will this have on home loan appraisals?
The action shows a clear change for PRS
Termination of Section 21 and new hires from time to time: The end of Section 21 removes the ability of landowners to recover property without cause, introducing more disputes in the courts and extending the time period for recovery.
When combined with periodic rentals, rental income becomes less predictable. Since lenders rely on stable income to assess affordability, this is a major concern.
Restrictions on raising rent: With rent increases limited to once a year and under challenge, landlords are losing an important handle on paying higher costs. This can cause difficulties during a lender’s stress test.
Housing standards and compatibility: Although the Decent Homes Standard is not yet in place, the new housing standards and PRS minimum energy performance certificate requirements will undoubtedly be the biggest task for landlords over the next five years.
For consumers it marks the beginning of a time when professional guidance becomes important
The level of improvement required will vary, but homeowners with large backlogs face significant costs to pay for buildings and meet guidelines. Non-compliance imposes fines and enforcement measures but meeting the targets will come at a high cost.
How will lenders react?
No lender has formally revised its criteria. However, this practice comes with risks that lenders cannot ignore.
Cashflow flexibility: Changing tenants and shortened notice periods can cause lenders to view rent as variable. Therefore, we may see estimates of income coverage at risk, which would strengthen the affordability test.
Increased compliance and development costs: As mentioned, the new building standards will lead to increased maintenance costs. Lenders may require proof of planned improvements during applications to ensure compliance.
This first stage is facing a big problem in this field
Rent control restrictions: Annual rental rates will reduce the ability of landowners to increase their income. We expect lenders to take a firmer stance on affordability margins, particularly in areas where compliance costs are rising faster than allowable rent increases.
High legal and administrative costs: As homeowners face court proceedings for any foreclosures, lenders may respond with more risk-adjusted assessments on large portfolios, and limited loan-to-value.
Income sustainability concerns: Less predictable employment may pressure lenders to require: higher rates of employment; higher profit margins to cover unexpected costs or downtime; and tighter stress levels for homeowners with more properties available
Price and loan adjustments: Increased costs will inevitably impact valuations, which may lead to a shift to lower LTVs or a reduced supply of older stock.
What does this mean for consumers?
The law creates both challenges and opportunities. Complex cases may arise, especially when homeowners are faced with development costs, variable income or strict terms of lenders. However, this also positions retailers as key advisors who can translate legislative changes into effective strategies.
This practice comes with risks that lenders cannot ignore
So, expect a lot of situations where the discussions range from, ‘Which rate is the cheapest?’ on, ‘How can I finance property development? Is my portfolio diversified enough to absorb rental restrictions? Will my portfolio stand up to the hiring pressure test?’
Those who navigate these conversations early will build stronger, stronger customer relationships.
The new lending situation
The Employers’ Bill of Rights represents a clear change for the PRS, with implications that extend beyond employers’ rights.
With rent increases limited to once a year and under the challenge, landlords lose the main lever to pay higher costs.
For lenders, it introduces new uncertainty about cash flow and compliance. For homeowners, it adds additional cost pressure and performance requirements that will affect portfolio performance.
And for consumers it marks the beginning of an era in which professional guidance becomes essential.
Jeni Browne bdirector of business development, Mortgage Finance Brokers
This article appeared in the April 2026 issue of Mortgage Strategy.
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