This Week’s Top UK Property Landlord News: Critical Updates for Residential and Commercial Investors

Renters’ Rights Bill Nears Royal Assent – Implementation Expected Spring 2026

Bottom Line: The most significant overhaul of rental legislation in decades is on track to become law within weeks, with implementation likely in early to mid-2026.

The Renters’ Rights Bill has cleared its final parliamentary hurdles and is expected to receive Royal Assent in late October or early November 2025. On 8 September, the House of Commons considered amendments proposed by the House of Lords, and the bill returned to the Lords on 14 October for final consideration.

The legislation will fundamentally transform how tenancies operate in England. The assured shorthold tenancy system that has governed the private rental sector since the 1990s will be replaced with new assured tenancies. All existing fixed-term tenancies will automatically become periodic when the Act comes into force, meaning tenants can terminate with just two months’ notice at any time.

Key Changes for Landlords:

Section 21 “no-fault” evictions will be completely abolished for both new and existing tenancies. Landlords will only be able to end tenancies using Section 8 grounds, which require specific reasons such as rent arrears or property damage. This represents a fundamental shift in landlord-tenant power dynamics, with over 100,000 households having faced Section 21 evictions in the past five years.

Rent increases will be restricted to once per year and must follow the Section 13 notice procedure – any other method will be null and void. Tenants will gain new powers to challenge rent increases they consider unreasonable through tribunal proceedings.

The government has also introduced a significant amendment limiting advance rent payments. Landlords will no longer be able to demand multiple months’ rent upfront, with the limit set at one month’s rent in advance alongside a security deposit of up to five or six weeks’ rent. This closes a loophole that has seen some tenants asked to pay up to a year’s rent before securing a tenancy.

What This Means for You:

Industry bodies including the National Residential Landlords Association have warned that while these reforms aim to provide tenant stability, they will increase compliance costs and may push more landlords to exit the market. There are concerns about potential court backlogs as possession claims move from administrative to evidential processes.

Landlords should begin preparing now by reviewing their tenancy agreements, updating management processes, and considering how the loss of Section 21 will affect their exit strategies. The planned implementation date of spring 2026 gives a limited window for preparation.

Landlord Numbers Fall 1.04% as Individual Operators Exit Market

Bottom Line: Nearly 30,000 landlords have left the sector in the past year, with amateur landlords bearing the brunt of regulatory pressure.

New government data analysed by lettings service Dwelly reveals that the number of landlords declaring rental income fell to 2.86 million in 2023/24, down from a five-year peak of 2.89 million in 2022/23. This marks a clear and accelerating decline in the sector.

Regional Variations:

The impact has been felt unevenly across the country. Wales experienced the largest annual drop at minus 2.7 percent, followed by Yorkshire and the Humber and the South West at minus 1.6 percent each. Northern Ireland and the North East both saw declines of minus 1.5 percent, while the South East fell by minus 1.3 percent.

London bucked the trend, recording the only increase with a 0.4 percent rise to 474,000 landlords. Some regions including the West Midlands, Channel Islands, and Isle of Man remained static.

Why Landlords Are Leaving:

Analysis suggests that individual landlords without significant resources are most at risk of exiting as the Renters’ Rights Bill approaches. The proposed abolition of Section 21, combined with wider reforms to tenancy agreements and compliance requirements, threatens to make it harder for individuals to operate without substantial administrative support.

These landlords have already contended with previous legislative changes including Section 24 mortgage interest restrictions, increased stamp duty surcharges, and stricter energy efficiency requirements. The cumulative burden is proving too much for many smaller operators.

Market Impact:

This exodus is occurring precisely when rental demand remains high, with rental supply still 18 percent lower than pre-pandemic levels according to Zoopla data. The departure of landlords risks further constraining supply, potentially driving rents higher and making it even more difficult for tenants to find suitable accommodation.

Awaab’s Law to Force Urgent Repairs from 27 October 2025

Bottom Line: Social landlords face strict new deadlines for fixing damp, mould, and emergency hazards from late October, with plans to extend to the private sector within two years.

Awaab’s Law, introduced following the tragic death of two-year-old Awaab Ishak from exposure to mould in social housing, will come into force on 27 October 2025. The legislation imposes strict timeframes on social housing landlords to address dangerous hazards.

Phase 1 Requirements (From 27 October 2025):

Social landlords must address all emergency hazards within 24 hours. Emergency hazards are defined as those presenting an imminent and significant risk of harm, including gas leaks, electrical hazards, and loss of water supply.

For damp and mould hazards that present a significant risk of harm, landlords must conduct an investigation within 14 calendar days of receiving a tenant report. If a hazard is confirmed, repairs must be completed within seven calendar days for significant health or safety risks.

Landlords must provide tenants with written summaries of their findings within three working days and keep them fully informed throughout the process. Failure to comply can result in court action, with tenants able to use the full powers of the law to hold landlords accountable.

Future Phases:

In 2026, Phase 2 will extend requirements to include excess cold and heat, falls, structural collapse, fire, electrical hazards, explosions, and hygiene hazards. By 2027, Phase 3 will cover all remaining Housing Health and Safety Rating System hazards except overcrowding.

Extension to Private Sector:

The government plans to extend Awaab’s Law to the private rental sector through secondary legislation in 2026-2027 as part of the Renters’ Rights Bill. Private landlords should begin preparing now by implementing routine inspection schedules, maintaining detailed records, and establishing clear tenant reporting mechanisms.

Housing Ombudsman Richard Blakeway has noted that around half of current casework concerns damp and mould, with landlords repeatedly failing to take full responsibility. The new law represents a zero-tolerance approach to housing hazards.

Inheritance Tax Warning: Limited Company Landlords Face 40% Liability

Bottom Line: Over 400,000 landlords using limited companies for tax efficiency may be unwittingly creating significant inheritance tax exposure for their estates.

A stark warning has emerged for the growing number of landlords who have incorporated their property portfolios into limited companies. While this structure offers advantages including lower corporation tax rates and full mortgage interest deductibility, it creates a hidden inheritance tax time bomb.

The Problem:

Every pound of equity growth in a limited company is locked into the shareholder’s personal estate and exposed to a 40 percent inheritance tax charge on death. For landlords who have spent decades recycling equity and compounding growth, this bill could run into hundreds of thousands of pounds.

Residential property held in limited companies does not qualify for Business Property Relief, which is reserved for genuine trading businesses rather than investment activities. This means the full value of the company shares forms part of the taxable estate above the nil-rate band of £325,000 (potentially £500,000 if leaving a main residence to children).

Why the Rush to Limited Companies?

Seven out of ten landlords planning to purchase new buy-to-let properties intend to do so via a limited company structure, according to recent research by Paragon Bank. The proportion remains at historic highs, driven by tax advantages over personal ownership.

Limited company landlords benefit from corporation tax rates between 19 and 25 percent on rental profits, compared to income tax rates of up to 45 percent for individuals. They can also deduct mortgage interest as a business expense, whereas individual landlords lost this relief through Section 24 restrictions.

However, 73 percent of landlords hold common misconceptions about limited company structures, with 23 percent wrongly believing they offer fewer tax benefits.

Solutions for Inheritance Tax Planning:

Landlords can mitigate inheritance tax liability through several strategies. Family Investment Companies allow equity growth to be passed to the next generation through share gifting, with proper structuring ensuring growth accrues to beneficiaries rather than the original owners.

“Freezer shares” can be used to divide company shares into different classes, freezing the value of the founder’s shares while future growth accrues to children or other beneficiaries. Shares gifted more than seven years before death escape inheritance tax entirely.

However, transferring property into a limited company structure incurs stamp duty land tax and potentially capital gains tax, so professional advice is essential to determine whether the long-term benefits outweigh the upfront costs.

Commercial Property: Upwards-Only Rent Reviews Face Ban

Bottom Line: The government has proposed banning upwards-only rent reviews in new commercial leases while giving tenants statutory powers to trigger reviews.

Commercial landlords are facing significant reforms to rent review mechanisms that have long been standard practice in the sector. The proposed changes aim to rebalance the landlord-tenant relationship in commercial property, mirroring reforms taking place in the residential sector.

What’s Changing:

Upwards-only rent reviews will be prohibited in new commercial leases. These clauses have traditionally protected landlords by ensuring rent can never decrease at review, even when market conditions deteriorate. The ban means future reviews will need to reflect actual market conditions, potentially allowing rents to fall during economic downturns.

Tenants will gain new statutory powers to trigger rent reviews, removing landlord control over the timing and initiation of reviews. This represents a significant shift in negotiating power, particularly for tenants in long-term leases who may currently be paying above-market rents.

Market Context:

The UK commercial property market has experienced subdued conditions in early 2025, though the outlook for the second half of the year appears stronger. Between January and July, total turnover in the City investment market reached £2 billion across 42 transactions, which is 33 percent lower than the five-year average.

However, the average deal size has increased significantly to £47.6 million, compared to £23.6 million at the same point in 2024, suggesting renewed investor appetite for larger lot sizes. Seven deals over £100 million have already been completed in 2025, exceeding the total of four such transactions across the whole of 2024.

Sector-Specific Trends:

The industrial sector continues to see good levels of demand with resilient values. Demand for small industrial units under 5,000 square feet remains particularly strong, with impressive rent levels being achieved.

The office market shows positive net balance for occupier demand, with prime rental levels proving highly resilient. This reflects supply-demand imbalances for quality stock, particularly in city centres.

Retail remains challenging, with town centre retail voids increasing, though suburban areas are experiencing better occupancy rates. Average retail rental value growth has accelerated to 2.0 percent annually in June 2025, the highest rate since 2008.

What Commercial Landlords Should Do:

Review existing lease terms and consider how new regulations might affect lease renewals. Properties with upcoming reviews may need to be valued more conservatively if downward reviews become possible. Consider negotiating alternative lease structures that provide stability while complying with new regulations.

Selective Licensing Schemes Expand Across Multiple Councils

Bottom Line: Councils across England are rolling out new selective licensing schemes requiring landlords to obtain licences for individual properties, with fees typically ranging from £500-£1,000 per property.

Multiple local authorities have announced new or expanded selective licensing schemes this month, requiring landlords in designated areas to obtain licences for each property they rent. The schemes aim to drive up housing standards and tackle anti-social behaviour, but critics argue they amount to a “cash grab” that will drive up rents.

Recent Implementations:

Lambeth Council’s Phase 2 selective licensing scheme came into force on 1 September 2025, covering additional wards across the borough. Westminster City Council has announced that privately rented homes in 15 of its 18 wards will require a licence from 24 November 2025, covering single-household properties occupied by one or two individuals.

Croydon Council has unveiled plans for two new schemes covering 14 wards and more than 32,000 privately rented properties – representing 74 percent of the borough’s total private rental stock. After a five-year gap, this represents one of the largest licensing schemes in the UK.

North Lincolnshire Council’s selective licensing scheme for the Crosby and Park, and Town wards in Scunthorpe has proceeded following a High Court ruling dismissing a legal challenge. The scheme came into effect on 20 March 2025 but was delayed due to the challenge.

Thurrock Council in Essex has confirmed it will proceed with a selective licensing scheme despite significant opposition during consultation. Landlords and tenants complained the scheme is “nothing but a cash grab” and will only lead to higher rents. Paper applications will incur a £500 surcharge, encouraging digital submissions.

Licence Requirements:

Landlords must prove they are “fit and proper persons” to hold a licence and demonstrate adequate management arrangements are in place. Properties must meet minimum housing standards including electrical safety, gas safety, and fire safety requirements.

Typical licence fees range from £500 to £1,000 per property for a five-year period, often with discounts for accredited landlords or multiple properties under the same ownership. Licence holders can be based overseas but must appoint a UK-based agent with authority to manage the property.

Penalties for Non-Compliance:

Operating a licensable property without a valid licence is a criminal offence. Landlords face fines up to £30,000 through Civil Penalty Notices or prosecution resulting in unlimited fines.

Tenants can apply for Rent Repayment Orders to claim up to 12 months’ rent back if their landlord operates without a licence. Any Section 21 eviction notices served on properties requiring a licence become invalid if no licence is in place.

The Debate:

Responsible landlords argue selective licensing helps level the playing field by cracking down on rogue operators who cut corners. It can encourage regular maintenance, prevent costly repairs, and make properties more attractive to reliable tenants.

However, landlord bodies warn the schemes increase operational costs and administrative burdens, potentially driving smaller landlords from the market. With supply already constrained, this could lead to further rent increases, harming the tenants the schemes are meant to protect.

Rule Changes:

Following changes in 2024, councils no longer need government approval for selective licensing schemes covering more than 20 percent of their geographical area or affecting more than 20 percent of privately rented homes. This has led to a proliferation of schemes across England, with many more councils expected to follow suit.

Looking Ahead: What Property Investors Should Do Now

The convergence of these six major developments creates a challenging environment for UK landlords. The Renters’ Rights Bill, Awaab’s Law, inheritance tax concerns, commercial lease reforms, declining landlord numbers, and expanding licensing schemes all point toward increased regulation and costs.

Immediate Action Points:

For Residential Landlords:

• Review and update tenancy agreements ahead of Renters’ Rights Bill implementation
• Audit properties for damp, mould, and other hazards before Awaab’s Law extends to private sector
• Seek professional advice on inheritance tax planning if operating through a limited company
• Check whether properties fall within current or planned selective licensing areas
• Consider whether to expand, maintain, or reduce your portfolio given regulatory pressures

For Commercial Landlords:

• Review lease terms and rent review clauses in light of proposed reforms
• Assess portfolio valuations considering potential for downward rent reviews
• Monitor sector-specific trends and adjust investment strategy accordingly
• Maintain high standards of property management to protect asset values

For All Property Investors:

• Stay informed about legislative changes through industry bodies like NRLA and Propertymark
• Budget for increased compliance costs including licensing fees, inspection costs, and professional advice
• Build strong relationships with reliable tenants to reduce turnover during uncertain times
• Consider professional property management if regulatory burden becomes unmanageable
• Maintain excellent record-keeping for all property-related matters

The UK property investment landscape is undergoing its most significant transformation in a generation. Those who adapt proactively will be best positioned to navigate the changes successfully, while those who ignore the warning signs may find themselves facing unexpected costs, compliance failures, or forced exits from the sector.

Stay informed, stay compliant, and seek professional advice when needed. The next few months will be critical for shaping the future of your property investment strategy.