The Renters’ Rights Act is a gamechanger for the rental market. Landlords and developers who take proactive steps to ensure compliance with this legislation — including auditing their portfolios and engaging with lenders — will be best placed to navigate the post-Act new era.
By contrast, those who delay could risk leaving themselves open to financial and legal pressures and may miss out on important opportunities in a more tightly regulated market.
How the Act will impact the market
The Renters’ Rights Act 2025, passed on 27th October 2025, represents one of the most significant shifts in England’s rental market for decades. Although its full implementation is not expected until mid-to-late 2026, its influence is already being felt across the property investment and development sectors. For landlords, developers and investors, understanding these changes and acting early will be critical to protecting property portfolios and mitigating potential risks.
The most notable reform is the abolition of Section 21 ‘no fault’ evictions and fixed-term, assured shorthold tenancies. Landlords will no longer be able to remove tenants within the first year of a tenancy for reasons such as selling the property or taking it back for personal use. This change will have a marked effect on investor exit strategies and will need careful planning and re-evaluation for those who previously relied on this additional flexibility in tenancy agreements.
Rent controls add another layer of complexity. Increases are now limited to once per year and must reflect market rates. Tenants can challenge any rise, which could potentially result in court hearings if disputes continue. Even if a landlord’s case is upheld, the increase cannot be backdated, creating potential delays in achieving expected returns on investment.
The Act also introduces a minimum standard for rental properties through the Decent Homes Standard (DHS). Though this legislation is still under review, details are being ironed out and reforms are likely. It is expected that landlords will be required to promptly remedy issues such as damp and mould at their properties should they arise. It is therefore recommended that these landlords fully scrutinise the condition of properties within their portfolio ahead of the DHS’s adoption.
Given this added maintenance and compliance burden and the ensuing cost, lenders are expected to factor these capital expenditure requirements into stress testing and underwriting for both new schemes and portfolios at the point of requiring refinancing.
Engaging with lenders early will be key if landlords and developers are to understand how these changes may affect LTV ratios and refinancing options, especially for finance agreements up for renewal in the next 12 months. Doing so will be essential if they are to avoid potential unpleasant surprises, including the refusal of property finance applications.
Strategic considerations for landlords
For landlords with underperforming assets where yields are low and unlikely to improve, it may be prudent to adjust exit strategies. Selling at the earliest opportunity can help cut losses, freeing up stakeholders to invest elsewhere, while also avoiding protracted disputes with tenants. Court backlogs are another consideration, as challenges to rent increases could take weeks or months to resolve, delaying income adjustments further — assuming these increases can be applied at all.
Property developers entering the BTL market face additional challenges. Tenant selection is now more critical than ever, and robust protocols should be installed to safeguard rental income, including requiring guarantors and conducting thorough income checks. At the same time, the Renters’ Rights Act prohibits discrimination against families, benefit recipients, and pet owners. Though landlords can request pet insurance, they should still review their marketing materials and listings to ensure they do not contain discriminatory language on this topic.
What lies ahead
Looking to the future, further developments are expected ahead of the Act’s implementation, including the introduction of a national landlord ombudsman and a tenancy database. These mechanisms aim to streamline dispute resolution and improve transparency, but how precisely they will work is not yet clear. Landlords should nonetheless monitor these changes closely, as they will likely influence the compliance obligations and overall cost of managing rental properties.
Market dynamics are also shifting. Some landlords have already chosen to exit the sector, creating opportunities for institutional investors to expand their portfolios. Yet obstacles still remain, including void risks, compliance costs, and uncertain yield growth. As such, careful planning is crucial for those seeking to invest and enter the market.
Anyone seeking property development finance or loans should therefore look to act quickly. Early engagement with lenders can secure funding before criteria tighten further and ensure that refinancing options are available. When it comes to the rapidly changing BTL market, this first-mover advantage could be invaluable.
