As the UK housing market flounders under the headwinds of geopolitical uncertainty and a growing regulatory burden, what a moment it is for the Government to decide to bring its Renters’ Rights Act 2025 into force. Investor confidence is already slackening, development viability is fragile and housing supply lags alarmingly behind demand. 

So, why has the Government used this stormy economic backdrop as the cue to introduce a sweeping new package of rental reforms that threaten to inflict long-term damage on the very people they were meant to protect?

The Government’s objective in introducing its pro-tenant legislation is clear and understandable: it desires to provide stronger protections for tenants, greater security within the rental market and improved standards of accommodation. That’s praiseworthy. Up to a point. But housing policy cannot simply be judged by intent; it must be judged by outcome. New legislation needs to take proper account of how a market functions and the likely behavioural effects that new laws may be expected to have – even if, as here, they may not be the ones that are intended. And the likely outcome of the Renters’ Rights Act is, sadly, that there will be fewer homes, reduced investment and, ultimately, higher costs for renters themselves.

“The Government may believe investors will back schemes like data centres and supply depots to stimulate UK growth, even as housebuilding falls off its agenda. What they are overlooking, however, is the fact that capital is mobile”

Britain’s housing crisis is, at its heart, a crisis of supply. For years, successive governments have failed to build sufficient homes to meet ever-increasing demand. The result has been constrained supply, higher rents, reduced affordability and mobility, and increased pressure across every part of the housing market. Yet instead of focusing on increasing supply, this government has chosen to introduce additional layers of regulation on a market already struggling under the combined weight of planning delays, spiralling construction costs, higher financing costs and existing regulatory complexity.

The Act introduces a number of significant changes to the private rented sector, including the abolition of Section 21 ‘no fault’ evictions, the move towards periodic tenancies and strengthened compliance obligations on landlords. Although each measure may seem innocuous when viewed in isolation, taken together they fundamentally tilt the risk calculation away from wanting to invest in building residential housing stock in the UK to not wanting to.

That really matters because sentiment matters.

Residential developers need the confidence that comes from knowing developing an asset in the long-term will be protected from unnecessary regulatory risk. The cumulative effect of continuous and conflating regulatory intervention creates uncertainty. And when uncertainty rises, investment falls. And this can quickly become a vicious circle.

The Government may believe investors will back schemes like data centres and supply depots to stimulate UK growth, even as housebuilding falls off its agenda. What they are overlooking, however, is the fact that capital is mobile.

If the UK becomes a less attractive environment for residential investment, developers like us will simply choose to re-focus elsewhere. In some instances, that may mean shifting capital towards commercial property, logistics and warehousing, but, in others, it could mean looking overseas towards more stable and predictable jurisdictions that encourage growth and success and provide more reliable returns. That’s just plain economics.

If landlords exit the market (and they already are in their droves), while institutional investment slows and fewer developments are built, the inevitable result will be fewer available homes. This is why you cannot simply regulate your way out of a supply crisis.

The Government continues to speak ambitiously about its target of delivering 1.5 million new homes over the course of this Parliament. But targets do not a house make. Developers do. Investors do. Construction workers do. And we can only do so when the conditions exist for projects to make commercial sense. The Renters’ Rights Act risks being seen as the final nail in the coffin of UK housebuilding

There is another, better way forward. If the Government genuinely wants to help renters, it must focus less on punitive intervention and more on encouraging new supply. That means accelerating planning reform, reducing complex and costly regulation, bearing down on transaction and mobility taxes such as Stamp Duty and creating an environment where long-term investment in housing is actively and sustainably encouraged rather than deterred. Tenant protection and investor confidence are not mutually exclusive objectives. A healthy housing market requires both and they are, in fact, mutually reinforcing and beneficial ones.

Ultimately, the only real solution to Britain’s housing crisis is to build significantly more homes. That means making it easier, faster and more commercially viable for housebuilders to deliver them.

If the UK continues to saunter down its current Primrose path, the risk is not merely that fewer homes get built in the short term. Instead, confidence in the UK residential market may be permanently damaged for years to come.

And that’s not an outcome that anyone should sensibly wish to visit on ourselves, our families or our country.

Kamal Pankhania is CEO and Group Managing Director of the Westcombe Group, one of the UK’s leading developers of prime residential and commercial properties in the UK. He is also a member of The Mace Advisory Board and a senior Treasurer of the Conservative Party.