Renters’ Rights Act: all change for the living sector

The private rented sector

For the private rented sector in general, the most substantial change of practice will be a move away from the conventional practice of 12-month (or longer) fixed term tenancies, which will take place overnight on 1 May 2026.

From that date, all new and existing tenancies will be open-ended periodic tenancies, with the tenant able to terminate with two months’ notice. If landlords wish to terminate the tenancy, it will be necessary to specify a statutory ground for possession. If the tenant challenges this, court proceedings will be required and a judge will need to be persuaded that the statutory ground is met.

Rent increases will only be possible once annually and two months’ formal notice will need to be served by the landlord. If the tenant challenges the rent, a first-tier tribunal will determine whether the proposed new rent is a market rent. The new rent will not be payable until the tribunal has made its determination, with no backdating of the liability to pay the new rent.

This means that landlords will need to budget for a degree of uncertainty as to when their rent increases will come into effect and it will be difficult to achieve a harmonised rent increase date, as fluctuations are likely to occur across a portfolio.

Additionally, landlords will not be able to accept a rent that is higher than advertised, or to request more than one month’s rent in advance.

Student accommodation

The act will have a very particular effect on the student housing market, due to an exemption included for purpose-built student accommodation providers who are registered under the government-approved ANUK/Unipol codes. For these providers, the act does not apply and they will be able to continue issuing fixed term tenancies in line with the academic year.

All other student accommodation providers will fall within the scope of the new rules, meaning that periodic tenancies will need to be used and the common practice of requiring rent payments in advance – particularly from international students – will no longer be possible.

For landlords operating HMOs, the additional statutory ground for possession 4A will be available for lettings to full-time students, meaning that a tenancy can be terminated on four months’ notice if the landlord intends to re-let to other students. Notably, this new possession ground is only available where the tenancy was entered into fewer than six months before the tenant moved in.

This sits uncomfortably with existing standard practice in the student lettings market, where students will often sign up to tenancies more than six months before the start of the academic year, usually due to high demand caused by a shortage of available accommodation. Time will tell whether this rule change causes a splintered market between purpose-built student accommodation and HMOs.

Retirement housing

For retirement operators, the main sector-specific concerns are likely to be how the rent increase challenge process will operate in practice and the impact of the new grounds for possession on rent-to-buy arrangements.

Rent increase challenges will be determined by reference to a market rent, but there might not be a wide range of available comparables in the retirement sector, where the rent charged can take into account factors not included in general needs rental, such as meal provision and domiciliary care. This could result in unpredictable outcomes where rent increases are subject to challenge in the tribunal and potential operator cashflow difficulties.

Rent-to-buy landlords in the retirement sector usually rely on being able to terminate the tenancy within the first 12 months without proving fault, and then having the property available to re-let to another prospective purchaser. There are no available grounds for possession in the act that would cover this circumstance.

This means that retirement operators may decide to cease offering rent-to-buy products due to potential difficulties if it becomes necessary to recover possession from a purchaser who changes their mind or cannot afford to buy.

The law of unintended consequences

As is always the case with major legislative change, sector-specific ramifications will take time to emerge following implementation on 1 May 2026.

The one certain outcome is that the Renters’ Rights Act 2025 will permanently change market practice, as well as the economics of the living sector. We will find out over the course of the next year or so whether or not those changes are in line with market predictions.

Douglas Rhodes and Lizzie Pillinger, partners, Trowers & Hamlins