Smaller landlords are increasingly moving away from property ownership following the introduction of the first phase of the Renters’ Rights Act, warns financial advice firm Continuum, which describes the reforms as "an assault on landlords"

The company argues that regulatory changes are accelerating exits from the sector, with the new ruling only the latest pressure on landlords.

The first phase of the legislation, introduced on 1 May, abolished Section 21 ‘no fault’ evictions, removed fixed-term tenancies and introduced restrictions on upfront rent payments and rent bidding.

The changes also make it harder for landlords to sell properties, with landlords now required to use specific Section 8 grounds and provide at least four months’ notice, while being unable to use this route during the first year of a tenancy.

A second phase of reform later this year will introduce a new private rented sector database and a private landlord ombudsman.

Anthony Harris, independent financial adviser at Continuum, said he was seeing a growing number of landlords, particularly older and smaller investors, reconsider property ownership.

Harris said: "The Renters' Rights Act seems to be just the latest assault on landlords and I am seeing a general move away from property ownership, particularly for small landlords.

"As landlords get older, their appetite to deal with the ever increasing burden of legislation and possible risks to them and their property, they are tending to consider selling up and simply investing the sale proceeds after paying any tax due."

According to Continuum, which now has assets under influence of more than £3bn, a typical rental yield currently stands at 5.6%, while average annual returns from residential property over the past decade reached 8.6%, with almost half generated through capital growth. Over the same period, a diversified investment portfolio delivered average annual returns of 12.3%.

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