The Renters’ Rights Act (RRA) marks one of the most significant changes to the UK private rented sector in decades. With the first phase coming into force on 1 May 2026, landlords, investors, and property businesses will need to adapt quickly, not just operationally, but financially too.
From an accounting and advisory perspective, this legislation is more than a regulatory update. It has direct implications for cash flow, risk management, and long-term investment strategy.
What’s changing from May 2026?
The initial phase of the Act introduces several key reforms:
-Abolition of Section 21 ‘no fault’ evictions
-Assured tenancies move to periodic (rolling) agreements, with fixed terms no longer permitted
-Rent increases are restricted to no more than once in any 12-month period and only via the statutory process
-Rental bidding banned
– Stronger enforcement powers for councils
-Restrictions on rent in advance, limiting the initial rent to a maximum of one month after signing
Abolition of Section 21 “no fault” evictions
Landlords will no longer be able to regain possession of a property, using the Section 21 process, without providing a valid reason. This increases the importance of robust tenancy management and documentation.
All tenancies move to periodic agreements
Fixed‑term assured shorthold tenancies (ASTs) will be abolished. All existing assured and assured shorthold tenancies will automatically become assured periodic tenancies, and all new tenancies must be periodic from the outset.
This gives tenants greater flexibility, while reducing contractual certainty for landlords, particularly around tenancy duration and exit planning.
Rent increases are limited to once per year
Rent increases will be limited to one increase in any 12‑month period and must be made using the statutory Section 13 procedure, with the required notice period. Contractual rent review clauses will no longer apply for increases after 1 May 2026. This restricts landlords’ ability to respond quickly to market changes, which may impact yield and the recovery of inflationary cost pressures.
Rental bidding banned
Landlords and agents will no longer be able to accept offers above the advertised rent. The rent must be set transparently at the point of marketing, placing greater emphasis on accurate pricing strategies from the outset.
Stronger enforcement powers for councils
Local authorities will have increased powers to impose significantly higher civil penalties for non-compliance. Fines of up to £7,000 for breaches and £40,000 for serious offences raise the financial risk of getting things wrong.
A cap of one month’s rent upfront
Landlords will be limited to requesting no more than one month’s rent in advance. This may impact cash flow planning, particularly where upfront payments have previously been used.
Further phases, expected later in 2026 and beyond, will include the introduction of a national private rented sector database and a Private Landlord Ombudsman, adding further layers of transparency and accountability.
What does this mean from a financial perspective?
For landlords and property investors, the implications go beyond compliance:
- Cash flow management becomes more critical, particularly with restrictions on rent in advance and statutory controls on rent increases
- Void period risk may increase due to reduced control over tenancy durations
- Cost pressures may rise as landlords invest more in compliance, administration, and dispute resolution
- Portfolio strategy may need to be reassessed, especially for those operating at scale or with tighter margins
For some, this may prompt a shift in approach, whether that’s restructuring portfolios, reviewing financing arrangements, or reconsidering long-term investment in the sector.
Join our event
We will be holding an event to discuss this topic in more detail. For further information or to register your interest in attending, please email lucy.ellis@bhp.co.uk
For more information about how BHP can help, please contact a member of our team here.
This material is for informational purposes only and should not be relied upon as professional advice.
