Renters’ Rights Act 2025: get ready, get set, go!

The Renters’ Rights Act 2025, which received Royal Assent on 27 October 2025, introduces the most significant overhaul of England’s private rented sector (PRS) in decades. While the Act is now law, it will be introduced in three phases, giving stakeholders time to adapt.

Phase one: core tenancy reforms

Effective from 1 May 2026, key changes will include:

• Abolition of Section 21 “no-fault” evictions
• Introduction of assured periodic tenancies so that tenants can stay as long as they wish until the landlord serves a valid grounds-based Section 8 notice
• Advance rent payments being limited to a period of one month's rent
• Rent increases restricted to once per year with tenants able to challenge proposed rent that is above the market rent.

Phase two: enhancing accountability

Roll out of the PRS Database, a national landlord database, and the PRS Landlord Ombudsman, will begin from late 2026.

Phase three: increasing housing standards

The government will introduce a Decent Homes Standard to the PRS for the first time, with an implementation date of either 2035 or 2037 proposed in a consultation earlier this year. It will also extend Awaab's Law to the PRS to set legally enforceable timeframes by which PRS landlords must make homes safe, with a consultation to follow on implementation timescales. It has, of course, already consulted on plans to require all domestic PRS properties in England and Wales to achieve a minimum EPC rating of C by 2030 unless a valid exemption is in place.

Implications for lenders

These reforms fundamentally alter the risk profile of residential investment. The end of Section 21 reduces landlords’ ability to regain possession quickly, increasing exposure to arrears and enforcement delays. Periodic assured tenancies with no fixed term and rent control measures may also affect cash flow predictability.

Lender actions

• Review underwriting criteria to reflect longer possession timelines and stricter rent increase rules
• Stress-test affordability under scenarios of delayed possession and capped rental growth
• Update security documentation to ensure compliance with new tenancy structures and statutory obligations.

Engage with borrowers early on property upgrade requirements to meet the Decent Homes Standards and a likely future minimum EPC rating of C, as non-compliance could trigger enforcement action and adversely impact collateral value.