Our view on the housing reform
The Renters' Rights Act received Royal Assent on 27 October 2025, with the first phase of measures — including the abolition of section 21 — coming into force on 1 May 2026. As we promised in our mid-year note, we wanted to set out our thinking properly. Rather than one long piece, we have written four short ones — each focused on a different angle of the same question: what should change for us, what should not, and where the practical risks really sit.
I. A reform we broadly welcome
Our starting point is that this is, on balance, a reform we welcome. The private rented sector has needed a reset for some time, and the central principles of the Act — open-ended periodic tenancies, the abolition of section 21 'no-fault' evictions, fairer notice on rent increases, and an end to bidding wars — are difficult to argue with as a matter of principle.
The case against the reform tends to lean heavily on the risk of professional landlords leaving the sector. That risk is real at the margin, but our own view is that a sector defined by short-term, insecure tenancies and limited tenant recourse was never going to be a sustainable foundation for a healthy housing market. The Act forces a more considered, long-term posture from landlords — and that is a posture we have been operating from for some time.
II. What it changes about how we operate
In practical terms, the Act changes less for us than it might for landlords with shorter time horizons. Our portfolio has always been built for long-hold income, our underwriting has never relied on short-term repossession, and the relationships we maintain with our tenants and managing agents are built on the assumption that good tenants stay for years rather than months.
That said, there are concrete changes we are making. Tenancy agreements across the portfolio are being refreshed to reflect the new periodic regime. Rent reviews are being aligned to the revised section 13 procedure with appropriate notice. Property condition is being audited more systematically, with the Decent Homes Standard and the extension of Awaab's Law clearly in view. And we are watching the rollout of the new Private Rented Sector database carefully, with the intention of being early and accurate in our registrations once the system goes live.
III. The risks we think are under-discussed
Where we part company with some of the more enthusiastic commentary on the Act is on the question of risk. The reform is, in our view, broadly the right direction of travel — but it is not risk-free for landlords, and the risks are not evenly distributed across the sector. They fall hardest on those who relied, knowingly or otherwise, on a degree of tenancy stability that the Act now removes.
Asymmetric notice. Under the new periodic regime, a tenant can end the tenancy with two months' notice at any time — including, importantly, at any point during what would previously have been a fixed term. Twelve-month fixed-term agreements no longer exist; the contractual certainty they provided to landlords goes with them. A tenancy that a landlord might reasonably have underwritten to last twelve to twenty-four months can now end after sixty days. The landlord, by contrast, cannot end the tenancy at all without a valid statutory ground.
Compressed payback windows. The fixed costs of letting a property — agent fees, referencing, the inevitable mid-tenancy refurbishment, the rent-free fortnight on a turnaround — used to be amortised across the length of a fixed term. With short-notice tenant exits now possible from day one, those costs need to be earned back over a much shorter, much less certain period. For lower-yielding properties in particular, this materially affects the underwriting.
Higher void exposure. A two-month tenant notice is rarely a two-month leasing window in practice. By the time the tenancy ends, viewings have happened around an occupied tenant, the property may need works before it can be re-let, and seasonal demand may not be in the landlord's favour. We expect average voids across the sector to rise, and we are stress-testing every new acquisition against that assumption.
Contractual workarounds will be limited. Some landlords are exploring longer notice periods, larger deposits or step-up rents to offset this risk. The Act significantly constrains all three. A tenant cannot be held to a notice period longer than two months unless they specifically agree in writing, deposits remain capped, and rent reviews are now subject to the revised section 13 procedure with a minimum two months' notice and only one increase per year. The room for clever drafting is narrower than it has ever been.
None of this changes our overall view that the reform is sound. It does, however, mean the underwriting bar should be higher — not lower — than it was before, and that landlords who were quietly relying on twelve-month fixed terms to make the numbers work are likely to find them less workable from May 2026 onwards.
IV. What it means for the wider market — and for us
Beyond the four walls of our own portfolio, our view is that the reform is likely to accelerate a sorting of the sector that was already underway. Some smaller landlords will choose to exit, particularly those who relied on section 21 as a proxy for active management or whose stock does not meet the standards now coming into view. Others will exit because the new notice asymmetry simply does not suit a one- or two-property portfolio, where a single short-notice exit can wipe out a year's net income. Both effects will create supply pressure on rents in the short term and acquisition opportunities for those willing to operate professionally and at scale.
Our intention is to lean into that opportunity, but to do so in keeping with the principles we set out in 2023 — diversification, careful underwriting, low debt-to-equity, and a clear preference for opportunities that work on the existing income alone. We will be underwriting new acquisitions to a longer assumed void, a more cautious gross-to-net adjustment, and shorter average tenancy lengths than we used historically. The Act does not, in our view, change the way intelligent property investing should be done. It simply makes it harder to do it any other way — and harder still to do it without proper underwriting.
If you would like to discuss how the changes affect a specific portfolio, an opportunity you are considering, or a position you are looking to exit, please do get in touch. We would be glad to hear from you.