Does the Renters Rights Act 2025 mark the beginning of the end for residential letting?

The Renters Rights Act 2025 ends the no fault eviction process. The service of a section 21 Notice, giving the tenant two months’ notice to leave with no further explanation is no more, with the last date for serving a valid notice being 30 April 2026. For the avoidance of doubt – any section 21 notices served before 1 May are still valid with proceedings needing to be brought by 31 July 2026.

Now, a landlord seeking possession must rely on the “beefed up” section 8 grounds. These grounds need the landlord to provide a reason for wanting the property back. This complicates matters, because in the absence of a relevant ground the tenant can remain in the property, and second, because any grounds are open to challenge with there now being fines of up to £40,000 and beyond in certain circumstances, where the grounds have been relied upon erroneously.

This means that landlords are likely to need to take legal advice before serving a section 8 notice to ensure that the grounds are met. In a similar vein, it is likely to lead to lawyers and letting agents taking the matter more seriously, and charging more, as they too can be liable under the Act for erroneously relying on a section 8 notice. Even worse, they could be sued by the client (landlord) if they are later fined for professional negligence or breach of contract. This will arguably increase fees, waiting times and the ever-growing Court backlog.

In my experience, the no-fault eviction process was primarily used where the tenant failed to pay rent. I will come on to rent under the Act and its changes – but begin with what the Act says re discrimination. While the landlord does have the final say under the Act regarding who the property is let to and can carry out referencing checks to ensure that the tenant can afford the property, they cannot deny the tenant because they have children or are in receipt of benefits. Similarly, they cannot unreasonably refuse a tenant from keeping a pet. These are all common causes of landlord and tenant conflict.

In terms of setting rent initially, rent bidding is now illegal under the Act. This is where a rental property is advertised with a rent and then potential tenants bid the rent up to secure the tenancy, with the tenant proposing the highest rent winning and securing the tenancy. Now, under the Act, the property must be advertised with a rent and that rent is the one that must be accepted. So, the first tenant to agree to pay it – will be the winner. Again, this is likely to drive rent upwards, as no Landlord is going to want to seek a rent which is too low. This again is likely to put more pressure on letting agents to give accurate advice or face the consequences should their estimate prove to be too low with the landlord losing out.

Rent can be increased under the new procedures in the Act, but only once a year and not within the first year of the tenancy. There is one procedure for the rent increase and any terms included in the tenancy which seek to vary this are void. The landlord must give the tenant two months’ notice of the proposed rent increase. However, the tenant can challenge the rent at the First Tier of the Property Tribunal. The Tribunal is costs neutral – so if the tenant wishes to challenge – there are no obvious costs consequences for them. This will surely mean that if the landlord and tenant cannot work things out themselves there will be delay and more costs with lawyers in dealing with the Tribunal. If you were a tenant, why wouldn’t you challenge every increase?

Once the Tribunal has assessed the correct rent it cannot be back dated. So again, any challenge will mean that the tenant pays a lower rent for longer and puts back the 12-month period from which any new rent increase can be applied for.

The Act also brings in a private renters data base which all residential Landlords must belong to. This will also surely be scrutinised by HMRC. An Ombudsman is also introduced which will allow tenants to complain about their landlords. The Ombudsman has the power to compel an apology from the landlord, order the landlord or a third party (for example their accountant) to provide information, order that the landlord take remedial action or pay compensation.

The Act brings in sanctions for failure to comply with using the appropriate grounds of section 8, being discriminatory or unreasonable or failing to abide by the Ombudsman’s finding. These span from being expelled from the Ombudsman’s scheme, to fines of £7,000 for first offences, rising to £40,000 for more serious ones and the threat of criminal prosecution for very serious cases. In certain cases, there is also the prospect of a rent repayment order which can mean that a landlord could find themselves having to pay back up to 24 months’ worth of rent.

As it is local authorities, in the main, that are going to be policing matters and levying fines – this will create a new stream of revenue for them, with the concern being that they will actively and zealously pursue matters. One speaker on a course that I attended believed that central government was actively encouraging local government to pursue matters.

There are other points, such as the move towards the Decent Homes Standard and the introduction of Awaab’s Law. However, all of the above will surely mean that the regulations are prohibitive to landlords with difficult or challenging tenants making life difficult. The fear is that many landlords will sell and get out of renting altogether.

I am not so sure. We saw George Osbourne’s tax changes to the market in 2015 forcing landlords to set up companies. This was hailed as dire, but landlords weathered it. I have seen first time landlord clients quickly realise that renting is not for them and get out, this often being driven by bad tenants. I think the future will really turn on making sure that landlords do their due diligence, so that they are getting a good tenant in the first place. If they get that right I’m not sure much will change. But where they get it wrong, or the area of the property is likely to lead to a tenant of a certain type, this may lead to landlords leaving the market in those geographical areas. This will have an impact on the market.

We will have to watch this space.

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