The Renters' Rights Act is now law. For landlords and buy to let investors, it represents the most significant shift in the private rented sector in decades. Here's what has changed, what it means in practice, and how to think about your position.
The End of Section 21
Section 21 is the so-called "no-fault" eviction notice that allowed landlords to reclaim their property without giving their tenant a reason. This now no longer permitted.
In it's place, landlords must use one of the reformed Section 8 grounds for possession. These grounds have been expanded and clarified, covering situations such as:
- Selling the property - landlords can reclaim possession if they intend to sell, subject to conditions
- Moving in - if the landlord or close family member intends to occupy the property
- Serious rent arrears - the threshold for this has changed, it is worth reviewing the current thresholds carefully
- Antisocial behaviour - strengthened grounds for persistent issues
The key shift is that every possession claim now requires a stated reason, and the grounds must be evidenced. Good record-keeping has always mattered, but now more than ever.
Rent Increases
There have been changes to how rent increases work. Landlords can now only increase rent once per year, and tenants have a strengthened right to challenge increases they consider to be above market rate through a First-Tier Tribunal.
If you're a landlord with a portfolio built on regular rent reviews, this is worth understanding in detail. The process hasn't changed dramatically for those already operating within fair market norms, but the formal process is now more clearly defined.
What This Means for Buy to Let Investors
The Renters' Rights Act has prompted some landlords to exit the market. That has created opportunity as well as uncertainty.
For those staying - or entering - the buy to let market, the fundamentals haven't changed. Well-maintained properties in strong rental demand areas, let to good tenants at fair market rents, remain a sound, long-term investment. The administrative and legal framework around managing that investment are what have changed.
Lenders have been watching the legislation closely. Most mainstream buy to let lenders are comfortable with the new framework. Specialist lenders, particularly those active in HMOs, limited company structures and multi-unit portfolios, have been updating their criteria accordingly.
Limited Company Buy to Let
For investors holding property in a limited company structure, the Renters' Rights Act applies equally. The tax advantages of the limited company route remain intact, and for those with larger portfolios, the structure continues to make sense for many.
If you're unsure whether your current structure is the right one, a conversation with your mortgage adviser is the best place to start. Get in touch with the FORTO team.
Our View
Legislation like this creates noise, but it also creates clarity.
The Renters' Rights Act is manageable. It requires better systems, clearer documentation, and a more structured approach to tenancy management.
If you're reviewing your portfolio - whether that's refinancing, expanding, or restructuring - we're here to help you think it through. Your first consultation is free!