Will the pitfalls of the Renters’ Rights Act outweigh its benefits?

Well-Intentioned, badly timed and the people it’s meant to help may be the first to suffer – that’s the claim of a recent media article

Writing for the Financial Times (FT) this week, property expert Anna Clare Harper, a director of Pinnacle Investments gave her views on the pitfalls to the Renters’ Rights Act (RRA).

I have written many times on this topic, but this article raises several important issues, and with just a couple of weeks to go before the May 1^st implementation it’s perhaps an opportune reminder of what’s coming and what you need to do, so here we go, again.

Tenants’ insecurity

On the face of it, the RRA is hard to argue with, as Anna Harper says. Eleven million households rent privately in England. Far too many tenants have lived with insecurity, poor conditions, and the ever-present threat of a no-fault eviction. A two-months’ notice coming through the letter box has the potential to upend their lives.

It should be added that the two-months’ Section 21 notice story is misleading. In practice we know it takes on average of around nine months to evict a tenant, and local authorities almost always advise tenants to stay put, until they are formally evicted. Nevertheless, many tenants take the notice at face value and leave anyway.

Secondly, landlords rarely evict tenants for no good reason: it’s almost always for rent areas or anti-social behaviour, or less likely, because the landlord wants to live there or sell the property. It must be said that fear of the impending RRA has resulted in a surge of Section 21 notices.

The case for reform

The moral case for reform has been building for years especially as more families now rent privately; cross-party support for the broad direction of travel has never been in doubt.

But good intentions and good outcomes are not the same thing, as Anna Harper rightly points out. The RRA carries with it an irony: the key policy makers behind it are either reluctant or simply refuse to accept that the people this legislation is designed to protect may in the end be worse off because of it.

Fewer homes and higher rents are the likely result, argues Ms Harper. Plus, for landlords, a court system that is already breaking under its existing caseload is ill equipped to take on the extra workload from a wave of new possession claims. These under the RRA are claims that involve time-consuming and more complex court hearings. The system currently lacks the infrastructure to handle this extra work.

The landlords’ argument is not against reform per se. It is an argument for honesty about what happens when even well-designed legislation comes up against an under-resourced reality. Is this well-designed legislation?

“Renters may gain rights on paper but find fewer homes available, at higher rents, in practice.”

What’s changing — and when?

The new Act, which received Royal Assent in October 2025, comes into force in phases:

Phase one began with the new Investigatory Powers, effective 27 Dec 2025. Local authorities can now demand documents (like safety certificates) and enter business premises—such as letting agents—without a warrant. They can summarily seize evidence if they suspect a breach of rental laws.

LHAs will have greater access to third-party data, including Housing Benefit records, Council Tax info, and tenancy deposit schemes to proactively identify rogue landlords and unlicensed properties.

There are increased civil penalties for serious and persistent breaches (such as violating the ban on "no-DSS" discrimination or illegal eviction) increased to £40,000, with power to initiate criminal prosecution. Rent Repayment Orders (RROs) are strengthened, allowing them to be extended to superior landlords and enabling councils to recover rent paid through Universal Credit.

The Act also changes local authority enforcement from a discretionary power to a mandatory duty to enforce rental legislation in the council area

Phase two starts on 1 May 2026 and is the most sweeping and comprehensive change. From that date, the Section 21 “no-fault” eviction was abolished. Every possession claim must from then use an amended Section 8 ground of the Housing Act 1988. They must cite a specific legal ground for possession and justify it by documentary evidence, at a court hearing. The upshot is, it will be more difficult and more costly to evict a tenant.

At the same time, all assured shorthold tenancies, existing and new ones, will automatically be converted to open-ended periodic tenancies. There will be no fixed-term residential tenancies in England.

The reforms go even further: rent increases are to be capped to once per year and it will be made easier for tenants to challenge rent increases through the property tribunal. Bidding wars are to be banned where landlords and agents are legally prohibited from inviting, encouraging, or even accepting offers above the advertised rent.

Rent in advance, a mechanism particularly common in student lettings, is to be capped at one month and landlords can no longer discriminate against tenants on benefits or with children. In addition, tenants will have a formal right to request a pet, to which landlords must respond within 28 days.

Phase three is expected later this year when it will introduce a mandatory private rented sector (PRS) Database. All landlords must register and registration will be a prerequisite for seeking possession. There will also be a compulsory Landlord Ombudsman service, and both of these applications will be paid for by landlord subscriptions.

Phase four is due still later, with the roll out of the Decent Homes Standard and Awaab’s (damp and condensation) Law across the PRS. The penalties for non-compliance will receive a significant increase with fines up to £40,000, enforced by local housing authorities, and rent repayment orders will go back up to two years instead of one, and in serious cases, there will be criminal prosecutions.

So, what’s the problem?

Housing reform in England (as in other jurisdictions) is littered with countless rounds of legislation that in principle improve the lot of tenants as well as landlords. But in practice this ideal is difficult or perhaps impossible to deliver. That’s not because the moral case was wrong, but because the infrastructure needed has never been properly resourced, or the political will was never there to support it.

The prior signals are ominous: Planning reform has been stymied by under-resourced local authorities. The Building Safety Act has created severe delays in house building because there are not enough registered building control professionals to sign schemes off.

Will The Renters’ Rights Act suffer in the same way? Will it repeat that pattern, only with greater upheaval? Most likely is the answer.

The overloaded courts

The new system will hit a court system where the average time from possession claim, even under the existing paper-based Section 21 process, has stretched to nine months. With the abolition of Section 21, every landlord seeking possession through the Section 8 route will likely require a time consuming and expensive (possibly £3,000 per claim), court hearing. Coupled with an already overloaded system, time to possession will probably be even longer.

For the small-scale or accidental landlord with one or two properties the cost will be out of all proportion, the risk of letting will increase and they are more likely to exit the sector because of this.

“This legislation is arriving before the infrastructure is ready. For a small landlord with one property and a non-paying tenant, an 18-month possession process is an existential risk.”

Supply shrinking, demand surging

Already ahead of the 1 May 2026 RRA implementation, the market is responding. Many individual landlords have been exiting the sector. Possession proceedings have been accelerated while it’s still possible to use Section 21.

Others are concluding that, along with other factors, such as rising compliance costs, increasing taxes and the risk of getting a non-paying tenant they cannot remove quickly, the risk-reward equation no longer makes sense.

The result is a shrinking supply of private rental homes. This, at precisely the moment demand is rising. It is said by agents’ bodies that in some locations there are already seventeen households competing for every advertised rental property. Over 1.3 million households sit on social housing waiting lists, and some local authorities are spending so heavily on temporary accommodation it’s threatening their financial stability. Rental supply is now around 20 per cent lower than before the pandemic. At the same time demand is up more than 60 per cent.

This surely must make uncomfortable reading for the policy makers. Tenants might gain a whole package of new rights on paper. But market forces have a habit of ignoring what’s on paper - those rights may count for little in the face of a dwindling supply of homes available for rent, and the higher rents those homes command.

The rent-in-advance trap

The cap on rent in advance is well intentioned as it sometimes works against tenants. Few can afford 12 months or even six months in advance, but some can. It allows some tenants with bad credit histories, no income on paper or unusual employment to obtain a tenancy.

Apparently, one in five tenants use advance payments to secure a home because they cannot provide a guarantor. International students, migrants, and anyone with no UK credit history often rely on the good will of paying money up front to secure a tenancy. It enables them to compete in a market that would otherwise reject them.

Under the new regime, landlords will be tightening their screening process in any case, relying more heavily on credit checks, referencing, rent guarantee insurance (with strict assessment criteria) and taking guarantors.

The obvious outcome here is that the very groups the Act was designed to help, those with precarious credit histories, non-standard employments or on low incomes, will find it far more difficult to secure a tenancy.

More risk for tenants will result in one of two ways: more tenants will be rejected, and rents will gradually increase to adjust for landlord risk across the PRS.

The issues with pets

Having the right to request a pet sounds perfectly reasonable, after all many people have pets, especially families. But for landlords some pets present a real damage risk.

Under the RRA rules landlords must respond within 28 days to a request for a pet and cannot refuse “unreasonably.” Most worrying for landlords is the Act’s provisions on pets, removing landlords’ ability to require tenants to maintain specific insurance cover. This measure takes away one of the recognised mechanisms to offset the risk of property damage.

The pattern is repeated as with rent in advance, when landlords are prevented from using a risk reduction strategy, the commercial risk does not disappear. It simply gets transferred somewhere else, most likely into higher rents.

The pub analogy

The FT piece that prompted this analysis uses an interesting analogy, and it deserves to be taken seriously. Take the drink drive campaigns and the in-pub smoking ban. These were without doubt the right call. Most of us benefit from better public health and safety, and few would argue otherwise today.

But combined with the beer duty escalator, rising compliance and employment costs, it meant around a 20 per cent reduction in the total number of pubs since 2007, and the concentration of those that remain in the hands of a small number of large chains.

The independently run local pubs have been unable to absorb the higher costs and lower revenues involved, they have simply been closing one after another.

Likewise with small-scale individual landlords. They currently account for around 80 per cent of all private sector tenancies in England. That share is likely to fall, and to fall significantly. The compliance burden of the RRA, coupled with the extra taxation under Section 24 of the Finance Act and other tax changes, make small-scale buy-to-let an unattractive proposition for many. It will become harder to manage and sustain one or two rental properties.

The likely beneficiaries are institutional investors. Perhaps that’s what the government wants? But these units are aimed at a certain section of the letting market where their tenants can afford to pay higher rents for new and additional facilities. The individual tenant looking for affordable accommodation loses out.

“Nobody decided pubs should mostly be large chains. It became the only model that worked. The PRS is heading the same way.”

The black-market risk

One possible consequence of the Act that has received little attention from the media is the risk of driving a section of the rental market underground, says Anna Harper. There have already been signs of short-term or temporary letting being used to circumvent the new regulations.

Unlawful subletting, and the fraudulent use of social housing has existed for years, with some social housing tenants and even private tenants subletting properties. This practice could increase under the RRA, effectively creating an informal market within the system.

A black market in rental accommodation would run directly against what RRS is trying to achieve. Tenants in these informal arrangements are highly vulnerable and have none of the protections the legislation provides.

They will have no recourse to the Ombudsman service, no security of tenure, and no guarantee of basic safety standards. The growth of such an underground market would be the worst possible outcome of the RRA, but it is a high probability and something cash strapped local authorities, left to enforce against the problem, lack the resources they will need.

The compliance traps

Landlords navigating the immediate RRA compliance requirements will need to accept a heavier admin burden. Several practical compliance points demand your attention right now.

The government’s RRA Information Sheet must be served on all existing tenants by 31 May 2026.

The fine for non-compliance is up to £7,000 and crucially, sending a link to the online PDF is not valid. It must be delivered as a PDF attachment by email or text, or as a hard copy in person or by post. Every tenant named on the tenancy agreement must receive their own copy, and landlords should retain evidence that this has been done.

As from 1 May 2026, written tenancy information must be provided to new tenants before a tenancy begins and to existing tenants who don’t have a written agreement. Rent review clauses in tenancy agreements are banned and annual increases can only be implemented via a Section 13 notice with at least two months’ warning.

Bidding wars are now illegal so agents must be particularly careful about “best and final offer” scenarios, which are prohibited if they result in a tenant paying above the advertised price.

Landlords have 28 days to respond to a pet request. Unreasonable refusal risks enforcement action. Landlords should have a written pet policy and should document every pet decision they make very carefully.

On possession, documentation of rent arrears or antisocial behaviour is a vital requirement. Grounds for possession under Section 8 must be claimed using solid documentary evidence, anything short of this will fail.

From late 2026, a mandatory PRS Database registration process will be required. Landlords who don’t register will be unable to seek possession through the courts. You should begin putting together your compliance records including EPCs, gas and electrical safety certificates, and deposit documentation etc., right now.

The silver lining?

There is a silver lining, says Ms Harper. The Renters’ Rights Act may well, given time, deliver a safer and fairer PRS for tenants. But the path to get there will run through a period of real disruption. Landlords are facing higher compliance costs and more time-consuming involvement with their tenancies.

As Anna Harper points out, a more professionalised private rented sector should, in the long run, mean better-maintained properties, clearer processes, stronger accountability, and a more consistent experience for tenants.

Institutional operators have higher costs, reputations to protect and investors to answer to. For small-scale landlords who adapt with robust documentation, proactive maintenance, professionally managed tenancies, the regulatory environment, while more demanding, is also more predictable.

The new legislation, in many respects, simply codifies what good landlords were already doing. Those who have always selected tenants carefully, maintained properties properly, dealt with tenants fairly, and kept their paperwork in order, will find the transition is manageable.

For good operators who get it right, a consolidating market represents a genuine commercial opportunity. It’s a chance to raise the bar for renters Ms Harper says.