The Renters’ Rights Act 2025 is nearly here, and the private rented sector is approaching a moment of transformation unlike anything seen in decades. With the first tranche of reforms taking effect on 1 May 2026, professional landlords and investors now face a regulatory system that looks markedly different. The era of a lightly regulated PRS is effectively over, shifting the focus from political headline to operational reality.
Ending Assured Shorthold Tenancies
The abolition of assured shorthold tenancies in favour of open-ended periodic tenancies fundamentally alters long-established assumptions about tenure length, tenant mobility, exit strategy and tenant turnover. Fixed terms will no longer provide certainty around possession, and the removal of Section 21 brings an end to “notice-only” recovery of properties. Landlords will instead need to demonstrate specific statutory grounds, supported by evidence and consistent decision-making.
This shift creates a fundamental distinction between the English and Scottish legal frameworks, as the latter already operates under a similar open-ended structure. Consequently, the loss of the ability to use Section 21 removes a specific legal tool that previously simplified the eviction process, forcing a more granular examination of the tenant’s behaviour and the property’s condition.
From a risk perspective, this places renewed emphasis on process. Historic gaps in documentation or inconsistent management practices, once peripheral issues, may now determine whether possession claims succeed or fail. The shift requires a move away from relying on generic possession grounds toward a more rigorous, evidence-based approach to property recovery. This change compels landlords to maintain meticulous records regarding property maintenance, communication logs, and any breaches of tenancy terms, as the burden of proof shifts heavily onto the asset owner to demonstrate why a tenancy should not continue indefinitely.
Restrictions on Rent Increases
Rent regulation also tightens. Rent increases will be limited to once annually and must follow a prescribed statutory route. Tenants will have a statutory right to challenge both the amount and the validity of a proposed increase before the First-tier Tribunal, which will determine the open-market rent by reference to comparators. Crucially, contractual rent review clauses—whether in new or existing tenancy agreements—will be of no effect. The abolition of these clauses eliminates a common mechanism for indexing rents to market indices, such as the RPI, meaning that landlords can no longer automatically increase rents in line with standard economic forecasts.
For market-facing PRS products, this introduces additional pricing and timing risk. Rent increases will increasingly depend on robust market data, careful compliance with service requirements and a readiness to justify rent levels in a tribunal setting, rather than relying on contractual mechanisms or tenant turnover. This restriction effectively caps the ability to implement periodic rent escalations, requiring investors to structure their financial models around static or infrequently adjusted income streams, which directly impacts the valuation and yield expectations for large-scale portfolios.
A National Database and New Enforcement
The Act also embeds a step-change in transparency and enforcement. The introduction of a national Private Rented Sector Database, expected to begin regional rollout later in 2026, will for the first time require all landlords and privately rented properties in England to be registered on a single statutory system. Each property is expected to be linked to a unique compliance record, transforming how regulators monitor the sector and how tenants assess landlords. The system will function as a central registry, creating a searchable repository that allows local authorities to verify the identity and status of property owners instantly.
Crucially, this database will be underpinned by significant new enforcement capacity. With over £60 million recently committed by central government, local authorities will be better resourced to identify non-compliance and impose meaningful penalties where registration and compliance requirements are not met. The combination of a central registry and increased funding creates a more active oversight environment for the sector, enabling authorities to proactively target properties that are either unregistered or associated with landlords who have a history of regulatory breaches.
Mandatory Ombudsman Scheme
Alongside this, the Act introduces a mandatory Landlord Ombudsman scheme, offering tenants a free and binding route outside the courts. While designed to improve access to redress, it also reshapes the litigation environment. Complaints are likely be assessed against expectations of reasonableness, responsiveness and record-keeping, raising the stakes for operational consistency. The scheme aims to resolve disputes regarding deposits, repairs, and management failures without the need for court intervention, thereby reducing the backlog in the judicial system.
The changes move the PRS closer to the regulatory model long familiar in the social housing sector. For professional landlords, this represents both a compliance challenge and a commercial one. Preparation is no longer optional; it is core risk management and central to the survival of PRS business models. Those who delay face immediate risks, including inevitable disputes, enforcement action and lasting reputational damage. The requirement to adhere to ombudsman standards will likely drive the adoption of standardized management software and formalized complaint handling procedures across the industry.
Lee Russell, Partner, Real Estate Litigation, Devonshires Solicitors LLP
Devonshires is a London-based law firm with a leading real estate litigation practice, advising landlords, investors, developers and public sector bodies across the residential and mixed-use market. The firm is particularly well known for its expertise in disputes affecting the private rented sector, including possession claims, rent challenges, regulatory enforcement, compliance risk and complex landlord-and-tenant litigation. Devonshires acts at the intersection of property law, housing regulation and contentious risk management, with deep experience in the living sector.
