Tenancy legislation: Lessons for Nigeria from UK rental sector

 

…landlords exit rental sector amid regulatory pressures

Last month, precisely May 1, 2026, the Renters’ Rights Act 2025 came into effect in UK. Since then, the country’s private rental sector has been experiencing a significant shift as buy-to-let landlords increasingly exit the market, driven by mounting regulatory burdens.

Trevor Abrahmsohn of Glentree International has highlighted how the combination of tax changes, compliance requirements, and upcoming legislative reforms is fundamentally altering the investment landscape for private landlords.

This serves as a huge lesson for states in Nigeria that are pursuing legislative enablers to control the rental market, even when there are no government alternatives for renters.

As a show of concern and empathy for its over-sized rental population, the Lagos State government, since the days of former Governor Babatunde Fashola, has been tinkering with legislation on rents.

But the more the effort the state makes on this grows and changes hands, the more it remains the same. Several years after, renters in the state are still groaning under the weight of uncontrolled and insensitive rent increases by landlords. Many have found homes in unimaginable places as a result. Many more have left the state altogether for inability to cope.

In Enugu, the state government is also contending with its legislation on tenancy fees, including agency and agreement fees, caution deposits, legal charges, among others, which the state insists must not be more than 10 percent of a property’s rental value.

The exit of UK landlords from the rental sector or build-to-let or buy-to-let market is a result of intensifying regulatory burden. The proposed Renters’ Rights reforms, particularly the abolition of Section 21 ‘no-fault’ evictions, represent a critical juncture for landlords.

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It is expected that the changes will replace the current system with procedures that make regaining possession more complex, even for legitimate reasons such as property sales or refurbishment. This follows recent surges in Section 21 notices ahead of the eviction ban, indicating landlord concerns about future constraints.

The sector already faces substantial regulatory requirements, including Section 24 restrictions on mortgage interest relief, increased Stamp Duty Land Tax (SDLT) surcharges, reduced Capital Gains Tax allowances, local authority licensing schemes, comprehensive safety compliance standards, and Energy Performance Certificate targets approaching band C.

Additional obligations include Right to Rent immigration checks, anti-money laundering compliance, deposit protection requirements, and enhanced building regulations for Houses in Multiple Occupation.

To succeed in their rent control effort, the states need to learn from the UK experience, where, even as a mature market, there are still challenges enough for landlords to take actions as drastic as exiting the sector.

Close market watchers have advised that for governments in Nigeria to succeed with rent legislation, they have to put alternative houses on the market so that whoever cannot afford what the private sector operators offer, should resort to the government’s.

According to them, “you cannot dictate house prices or rent for someone when you did not dictate the prices of building materials, especially cement, which the producers have made largely unaffordable to everybody, especially private builders.”

PropertyWise, an online property research platform that has been monitoring developments in the UK rental market, says that, simultaneously, a shift in renting patterns is developing among older, asset-rich homeowners, as a response to the legislation.

“The traditional trajectory of selling family homes to purchase smaller properties increasingly involves significant transaction costs, including SDLT, legal fees, and service charges, with per-square-foot costs often higher in downsized properties.

For individuals over 70, renting offers potential advantages, including capital liquidity, inheritance planning flexibility, mobility without property chains, and avoidance of transaction taxes and major works costs. This represents a departure from traditional UK housing patterns where ownership has been the default aspiration,” the platform reports.