Fifty-one percent. That is the proportion of letting agents who say they are now more cautious about recommending applicants than they were a year ago, according to new data reported this week. It is the clearest signal yet that the private rental sector is splitting into winners and losers, and landlords on both sides need to understand which group they are about to fall into.
With the Autumn Budget landing tomorrow, Wednesday 28 October 2026, and a landlord tax rise confirmed for April 2027, this is a pivotal week for anyone with buy-to-let property. New findings on the Renters' Rights Act two-tier rental market, published by Property Industry Eye on 23 October 2026 and drawn from Goodlord's ninth annual State of the Lettings Industry report, suggest the market is reorganising itself around risk, scale and tenant type, just as costs are set to climb.
Key Takeaways
- 51% of letting agents are more cautious recommending applicants than a year ago, and 26% of landlords say they are now more likely to reject applicants they'd previously have accepted, per Goodlord's report (Property Industry Eye, 23 October 2026).
- Goodlord chief executive William Reeve warns the Renters' Rights Act two-tier rental market could leave students, foreign nationals and those with non-traditional incomes struggling to secure tenancies.
- Larger agencies and bigger landlords report different sentiment than smaller operators, a structural divide, not just a mood swing.
- Property income tax rates rise to 22%, 42% and 47% from April 2027, roughly five months away, sharpening the case for a portfolio review now.
- RICS valuations and condition surveys support lawful, consistent referencing decisions and help landlords plan hold, sell or incorporate decisions with evidence rather than guesswork.
What the Goodlord Data Actually Shows
Goodlord surveyed more than 3,000 letting agents, landlords and tenants for its ninth annual State of the Lettings Industry report. The full report is due for release on 29 October 2026, but early findings reported by Property Industry Eye paint a picture of caution spreading through the sector.
Key figures include:
| Metric | Figure | Source |
|---|---|---|
| Agents more cautious recommending applicants | 51% | Goodlord/Property Industry Eye |
| Landlords more likely to reject applicants they'd previously accept | 26% | Goodlord/Property Industry Eye |
| Landlords who'd rather leave a property empty for a lower-risk tenant | 31% | Goodlord/Property Industry Eye |
| Agent pessimism | Fell from 48% to 40% | Goodlord/Property Industry Eye |
| Landlord pessimism | 69%, down from 78% | Goodlord/Property Industry Eye |
| Tenant optimism | Rose from 20% to 37% | Goodlord/Property Industry Eye |
Importantly, these are reported intentions and attitudes, not confirmed rejection rates. The figures describe how agents and landlords say they feel and plan to behave, not a verified count of tenancies refused. That distinction matters for anyone quoting the data.
The Emerging Two-Tier Rental Market
The phrase "two-tier" captures two separate splits visible in the data.
The first is between tenant groups. William Reeve said: "certain tenants will now be far more likely to struggle to secure tenancies," naming students, foreign nationals and applicants with non-traditional incomes as most exposed. He linked this shift to changes around Section 21 evictions, rent in advance and rental bidding, which have altered how landlords assess risk before letting.
The second split is between landlords and agencies by size. The data shows:
- 42% of agencies with 11 or more staff are optimistic, compared with 28% of agencies with five or fewer.
- 81% of landlords with six or more properties are pessimistic, compared with 63% of single-property landlords.
- Reeve noted: "Bigger agencies are feeling far more chipper compared to their smaller counterparts."
Larger operators appear better placed to absorb compliance costs and referencing changes, while smaller landlords and agencies feel the strain more acutely. This is the structural heart of the Renters' Rights Act two-tier rental market, not just a divide in who gets housed, but in who can afford to operate confidently.
Separately, Mortgage Strategy reported that four in ten landlords have tightened referencing or affordability checks since the Renters' Rights Act became law, reinforcing that caution is translating into real process changes, not just sentiment.
Tenant Optimism Is Rising, Even as Landlord Caution Grows
Curiously, tenant sentiment is moving in the opposite direction to landlord sentiment. Tenant optimism rose from 20% to 37%, with younger renters especially upbeat: 50% of tenants aged 25-34 and 48% of those aged 18-24 are optimistic about the rental market. This suggests tenants expect the Renters' Rights Act to strengthen their position, even as landlords and agents report tightening their criteria. Reconciling these two trends will be one of the sector's defining tensions over the next year.
Acting Lawfully: Consistent Referencing, Not Blanket Exclusion
Landlords responding to a tighter risk environment must be careful not to cross from caution into discrimination. Equality law prohibits refusing applicants based on protected characteristics, and blanket exclusions of groups such as foreign nationals or those on certain incomes can expose landlords to legal risk, regardless of intent.
Practical, lawful steps include:
- Applying the same referencing criteria to every applicant, documented in writing.
- Assessing affordability using transparent, consistent thresholds rather than assumptions about income type.
- Keeping records of why a decision was made, in case it is later questioned.
- Reviewing processes regularly against current guidance, rather than relying on informal habits built up over previous tenancies.
Fair, consistent referencing protects landlords from legal exposure while still allowing genuine risk assessment.
Portfolio Review Before the April 2027 Tax Rise
From April 2027, property income tax rates rise to 22%, 42% and 47%, a two percentage point increase across the bands. That is roughly five months away. Tomorrow's Autumn Budget may also touch holiday let rules and capital gains tax reliefs, though this remains speculation until confirmed.
With market conditions already shifting, now is a sensible moment for landlords to review their position. Broad options, not tax advice, but structural considerations, include:
- Hold: Continue letting, but reassess rent levels against ONS data showing private rents up 3.8% to £1,406 a month in the year to August 2026.
- Sell: Consider disposal if yields or management burden no longer justify ownership, particularly for smaller landlords facing higher costs.
- Incorporate: Explore limited company structures, where appropriate, ahead of the rate change, a decision that should involve a tax adviser.
Buy-to-let lending remains active, with UK Finance reporting £10.7 billion in Q2 2026, up 25% by value year on year, at an average new rate of 4.82%. Prime London rents rose 4.0% in Q3 2026 with gross yields of 5.19%, per LonRes, evidence that demand and returns persist even amid tighter conditions.
What This Means for Landlords
- Expect more scrutiny on referencing, but apply it consistently to stay within equality law.
- Smaller landlords and agencies report greater pessimism, factor this into expansion or exit planning.
- The April 2027 tax rise is close; portfolio decisions made now have more runway than those made in spring.
- Tenant optimism is rising, meaning demand is unlikely to disappear, but access may be uneven across tenant groups.
- Document everything: referencing decisions, valuations and condition records all support defensible, lawful letting practice.
How Prince Surveyors Helps
As RICS chartered surveyors and valuers, Prince Surveyors supports landlords and investors across London and the UK with independent valuations, building and condition surveys, and advice relevant to refinancing, sales and compliance decisions. Whether reviewing a single buy-to-let ahead of the April 2027 tax change or stress-testing a wider portfolio against current market conditions, an RICS valuation gives landlords evidence-based clarity before they act.
FAQ
What is the Renters' Rights Act two-tier rental market?
It refers to an emerging split in the private rental sector, between tenants who find it easier or harder to secure tenancies, and between larger, more confident operators and smaller, more cautious landlords and agencies, linked to changes under the Renters' Rights Act.
Are landlords actually rejecting more tenants?
The Goodlord data measures reported attitudes and intentions, not confirmed rejection rates. It shows 26% of landlords say they are more likely to reject applicants they'd previously have accepted.
Is it legal to avoid letting to certain tenant groups?
No. Equality law prohibits discrimination based on protected characteristics. Landlords should apply consistent, documented referencing criteria to every applicant.
When does the landlord tax rise take effect?
Property income tax rates rise to 22%, 42% and 47% from April 2027, roughly five months from now.
Will the Autumn Budget change landlord taxation further?
The Budget on 28 October 2026 may address holiday lets and capital gains tax reliefs, but this remains speculative until confirmed.
Conclusion
The data points to a rental market dividing along lines of scale and tenant type, with smaller landlords and certain tenant groups facing greater uncertainty under the Renters' Rights Act. With the tax rise five months away and the Budget imminent, landlords should review referencing practices for fairness, assess portfolios against current yields and costs, and seek an independent RICS valuation before making hold, sell or incorporation decisions.