Landlords sell up as Renters’ Rights prove final straw
Leading Kent and London law firm Thackray Williams have had a wave of last-minute instructions from landlords looking to sell their portfolios ahead of the Renters’ Rights Act coming into force this Friday.
The litigation team has been instructed to seek possession by landlords wishing to sell their entire buy-to-let portfolios, as well as last-minute Section 21 ‘no fault’ eviction notices for both flats and houses.
“Our clients are all saying the same thing: the new liabilities and reduced flexibility being introduced by The Renters’ Rights Act 2025 from 1 May is the final straw in making their property investments no longer commercially or practically viable, particularly in a challenging economic climate and with other changes also in the pipeline,” says Mustafa Sidki, Contentious Construction Litigation Partner.
The Renters’ Rights Act 2025 is the most significant reform of the private rented sector in a generation, with the main tenancy terms coming into effect from this Friday, including: the abolition of section 21 notices (no fault evictions); the introduction of amended grounds for possession; the abolition of Assured Shorthold Tenancies (ASTs) with both existing and new tenancies moving to Periodic Assured Tenancies (PATs), with transition arrangements for existing tenancies; the limitation of rent increases; the introduction of anti-discrimination measures; and the right to request permission to keep a pet.
“The changes being introduced by The Renters’ Rights Act this Friday mean it will take longer and cost more for a landlord to regain possession of a rental property,” explains Mustafa. “This reduced flexibility is causing many landlords to rethink their investment strategies, especially as other factors mean they are facing reduced – and even negative cashflow – while also facing increased admin and responsibilities.”
“We’re anticipating increased instructions for our conveyancing team as these landlords put their properties on the market as soon as they are able, which in turn could negatively impact property prices, particularly in areas that have traditionally had a strong rental sector,” adds Conveyancing Partner, Claire Josef.
“Many portfolios are no longer commercially viable due to landlords losing the ability to deduct full mortgage interest from rental income (under Section 24 of the Finance Act) and the introduction of an additional 2% tax on income from property by Rachel Reeves in her November 2025 budget,” expands Mustafa.
“Additionally, fixed-rate buy-to-let mortgages of 1-2% are coming to an end this year, with new re-finance rates of 5-6% being offered,” he continues, “while the costs of maintaining properties, insurance premiums and local authority licensing fees have all risen this year due to inflation.
“For flat owners, service charges are also going up a lot due to inflation. Whilst service charges can be challenged, freeholders are saying that their own costs are increasing and thus the increases would be deemed reasonable.
“On top of this, landlords now have additional admin with the requirement of quarterly income returns introduced under Making Tax Digital at the beginning of this month.
“With many landlords facing costly upgrades to bring their properties up to EPC C by 2030 under the Decent Homes Standard 2026, many of them are saying the finances simply no longer add up and are rushing to beat the legislation to be able to divest their portfolios.”
There are two categories of ASTs which will not become PATs on 1 May 2026; first where there is a valid pending Section 21 notice or secondly where there is a valid pending Section 8 notice to start eviction proceedings when the tenant has breached the tenancy.
Paragraphs 3 and 4 of Schedule 6 of the Renters’ Rights Act prescribe that a valid Section 21 notice served before 1 May 2026 will remain valid, and the tenancy will remain an AST until the landlord obtains possession and the tenancy ends, the notice lapses or a judge decides that the notice is invalid.
“While many landlords have planned ahead for this, we are seeing a significant number of last-minute applications to serve Section 21 notices by Thursday from landlords who have decided property investment is now too challenging to be viable.”
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