Renters' Rights Act 2025: what you need to know

Tara

Hello I'm Tara Goodwin, Principal Associate here at Gowling WLG. Today we're here to talk about the Renters Rights Act 2025. The Act is one of the most significant changes to the private rented sector in decades. The aim of the reforms are to provide more security for tenants, fairness and improved housing standards for tenants. Today I'm joined by Clive Chalkley, Partner, Head of Real Estate Litigation, and we're going to talk about some of the changes within the Act, how they affect landlords, how they affect tenants, and maybe some of the unintended consequences that the Act might provide.

Tara

So one of the first changes is that there are going to be no fixed term tenancies anymore. So assured short hold tenancies known as ASTs are out. And then we're having periodic assured tenancies in. The idea behind that is that tenants aren't going to be granted very short term fix tenancies, which means that they're worried about whether they're going to be granted another one.

Tara

So whether they can be able to stay in their home. But on the flip side of that, it also means that landlords aren't going to grant very long tenancies, locking tenants into long term agreements. Maybe at high rents that tenants aren't going to be able to pay.

Clive

Yes, this periodic tenancy is basically, isn’t it, a tenancy of an indefinite duration, and it's either brought to an end by the tenant serving a two month notice. Or the landlord can end it on certain very specific grounds. And I think we'll talk a bit about that later.

Tara

Yeah. We'll come on to that later. So from a tenants perspective, they're quite happy with these changes because it means more flexibility for them. They can obviously end the agreement. It also means that they're not tied in and they've got a bit more security. But in terms of landlords, landlords are less likely to be receptive to this change and they're going to be a bit concerned about it.

Tara

So what are the things that you think that landlords might be concerned about?

Clive

Well, I mean, firstly, a lot of landlords, obviously use their properties as a source of, a safe source of income. And they think that, you know, if they can grant a three year lease to a tenant of a good standing, then that's a certainty of income for three years. And they may well have mortgages based on this or borrowing of other kinds based on an income stream from a tenant.

Clive

Obviously, the fact that you can't now grant, say, a three year lease will mean that the landlords don't have that security. The tenant at any point can serve a two month notice to quit their tenancy, and that's going to have a huge impact on landlords, I think, and their financial planning.

Tara

Yeah. Do you think it could impact the ability for landlords to get mortgages because they're not going to have an income stream that's consistent because tenants, they may have many tenants in a period because tenants only stay for short time and serve notice. So they're going to have gaps in their rental income.

Clive

Yeah I think that's probably fair. I think mortgage companies are going to take a really careful look at, you know, the types of yeah, the types of agreements that people got in place and whether or not they feel comfortable lending against them.

Tara

So obviously there's going to be a bit of a potential impact on landlords ability to get mortgages and things, but what about in terms of costs for landlords as well? So they have to pay agents fees. They have to pay to advertise a property. How could the changes affect that?

Clive

Yeah, I mean obviously there are upfront costs for agents every time you have a re letting. So I suspect these changes will mean that because tenants can give short notice to move on, there's likely to be more changes or more turnover of tenants.

So there will be, you know, higher sort of agency fees sort of final, sort of, deep cleaning fees and maybe more wear and tear on properties generally.

Clive

So yeah, I can easily see there'll be lots of additional costs as well rolled up in this.

Tara

Is that going to have an overall effect on the market do we think? So, the fact that landlords do have, potentially have this inconsistent income. Could that mean that market rates for properties potentially change or increase?

Clive

Yeah I mean it's, we've got to see how landlords react to this series of changes, don't we? But I can easily see landlords going well actually my income is not secure via rental property. It is probably more secure in, I don't know, stocks, bonds or whatever. And I think we could see a number of landlords look to exit the buy to let, sort of, market.

Clive

And the effect of any shrinkage of supply will be, the remaining supply has a higher demand and therefore rents go up. So yeah, this could, this could, as it were not work in the tenant's favour longer term. But we'll just have to see.

Tara

Yeah it's a really good point. And talking about rents I think the changes to rent in the way that rent is reviewed, under the new Act is something that we ought to talk about as well.

Clive

Yeah, absolutely.

Clive

So obviously the there are, sort of, two main provisions aren’t there about rent? The first of which is that, the tenant, gets to challenge the initial rent within six months. So I always think this is slightly bizarre. So a tenant can agree a rent with a landlord, but then within six months is allowed to challenge that rent if they don't think it's a market rent and bring a claim to the FTT to do it.

Tara

Yeah. I think that's quite different isn't it? To the, the current system under an AST for example, where if you entered into a long AST for say, 12 months at a set rent, that is the rent and the tenant doesn't have any ability to challenge that rent that they agreed and entered into for that fixed period. The mechanism for challenge to section 13 procedure existed with existing ASTs but obviously it's now brought in so that the fixed period, because there are no fixed periods, can no longer be protected.

Tara

So tenants, as you say from the outset, can challenge that within the FTT. Do you think tenants will start doing that. Is that something they're going to do?

Clive

Well, I mean, so with the FTT there's obviously typically no cost consequences for bringing an FTT claim. And okay, it is a hassle. You do have to sort of obviously go to court, but you can do it yourself. So I you know, I think that we've seen increasingly tenants challenged service charge regimes. Yeah. And I suspect we may well see tenants also, start to challenge their rents in a similar way.

Clive

So I think we'll see more of it rather than less. And I think the no cost sort of rules on the FTT will really help them, give them confidence that there's little risk in them doing so.

Tara

Yeah. And I've certainly seen an uptick in tenants challenging things such as residential service charge. And generally the tribunal is quite user friendly. And tenants managed quite well without legal representation to do that. So we may well see more tenants going for it. And they've got nothing to lose by having to go, as you say.

Clive

Yeah. I think another aspect of it is, the idea that you can't build in fixed rental income increases. So whereas landlords could previously say, well, year one we can have an increase of 5%, let's say, or a year two another 5% that's no longer allowed. You've got to, if you want a rental increase, you've got to follow the section 13 process.

Clive

So again, you can't future proof your investment, which I think was, we were talking about a bit earlier.

Tara

Yeah. Yeah, it's a really good point. And obviously the process does have to be followed. If it's not followed or landlords try and get around it by putting a clause into the tenancy agreement. That's not going to work. They do have to follow the process that's in the Act. So it's really worth landlords getting to grips with what they can and they can't do.

Tara

And obviously increases can only be to market. They're not able to increase based on you know, this is a really popular property. I've got 20 people wanting it. If it's still valued at market rent then that's what they can charge. Or if they decide they're not going to charge market rent they're obviously opening themselves up, then to a challenge by the tenant.

Tara

And from the outset, as you say.

Clive

Yeah, yeah, it's interesting. I wonder if it's worth having a quick chat about possession grounds.

Tara

Yes. So possession grounds. I think we've all heard quite a lot of talk about possession grounds. The one that everyone's probably seen in the news for years is the ban on section 21 evictions. The no fault ground, which is the most commonly used way for a landlord to remove a tenant. Although it's called no fault, it's really it's not the only no fault ground that exists, but it's if you like, it's a no reason ground.

Tara

You have to provide a reason. You can just say, here's a notice, we'd like you to leave. That's going to be gone. Although we don't have a commencement date for that part of the Act as yet. So as of today, 4th November 2025, we don't have a commencement date for that. But at some point that will kick in, section 21 notices will be abolished, abandoned, landlords won’t be able to use them.

Tara

So landlords are going to have to think about how they're going to remove tenants from properties if they need to. Obviously, if there is a fault or the tenant has done something wrong there in rent arrears, there are grounds to deal with that. But what's quite interesting is what about if a landlord just wants the tenant out for a particular reason?

Tara

What are the options to do so?

Clive

Yeah. So obviously there are a couple of grounds aren't there? That I would still say are no fault on the tenants part. So for example, the landlord wants the property back because he wants to sell it or he wants to live in it. Those are still grounds available to them, but they're quite strictly monitored, aren't they?

Clive

Because, if the landlord gets back possession of, it's property on the basis it wishes to sell it, then, it's got to sell it. And now it may well be that, the sale falls through.

Clive

But in either event, the landlord can't relet that premises for 12 months after it's evicted the tenant.

Tara

Yeah. Which is really interesting point that obviously goes down to trying to provide more security for tenants, but it's obviously providing less flexibility for landlords to deal with their property. As they like. It's interesting to think about how that's going to be enforced. So obviously when you rely on the ground, you're going to have to prove to a court that you satisfy that ground.

Tara

So in the example that you've given a solicitor's letter, an estate agent's pack, something to show that you are selling the property, you've marketed the property. But if the property is then removed from the market because the sale falls through or the landlord can't sell it, changes their mind. Who's monitoring the 12 month process? And I think that's something we're not yet sure about, but it will be something that we'll have to see how that's going to work in practice and whether it's something that is going to be monitored and how it's going to be monitored.

Clive

Yeah. You know, it's interesting. I mean, what worries me probably most about this whole process is that the courts just aren't equipped. For a lot of possession actions. I mean, we are typically seeing very long delays on residential matters and the county courts are overburdened as it is. But you know, we've definitely got examples where you don't see possession for at least a year.

Clive

And those kind of circumstances, especially if there are fault grounds going on, you can see that that's a huge problem for landlords.

Tara

Yeah. And I think that's true isn't it. Because the way the courts list possession hearings is, you know, 10 20 matters are all listed at the same time for possession hearing. But we've obviously got new grounds for possession, which everyone's got to get to grips with, including the courts and the judges. So inevitably some of these hearings where we've got a new ground that we're not quite entirely sure about how it works, is going to take longer.

Tara

And so it might mean that, you know, hearings get moved or the whole process just takes a lot longer than it should. And the impact is going to then be on landlords, isn't it, because they're not able to get possession back and do whatever it is they were planning on doing with the property.

Clive

Yeah, I think that's right. So I mean, I guess if we draw all these strands together, obviously we've only talked about three aspects of it. There are a lot of other aspects of the Act, right, to request pets and, you know, all sorts of other things as well. But what's your take on, you know, what you think the overall impact’s going to be?

Tara

I think landlords are going to be very concerned about the implications of the Act, particularly on them. I think smaller landlords are likely to be more affected because they're more sensitive to things like changes in income or inconsistent income and getting, the points we talked about earlier about getting mortgages, having to pay agency fees, that is going to affect them a lot more.

Tara

So I think potentially we're going to see some landlords deciding to withdraw from the market. I also think there could be, because of the inconsistency landlords that stay in the market, rents potentially may increase. And although there's a ban on high rents or not a ban, but they can be challenged by the tenant, I think market rent may increase.

Tara

And that's obviously not what was intended with the Act. It was intended, you know, to increase the fairness between the parties. But I think what maybe was unintended is that it may result in market rent increasing and therefore tenants paying higher rents than they're paying before the Act.

Clive

Yeah, I agree, I could definitely see landlords beginning to move out the market as their investments don't look as sure as they were before. Which will only increase the demand for the current stock.