Chapter 12: By The Book
Renters' Rights Act 2025 uncovered

Thackray Williams’ Mustafa Sidki examines how the Renters' Rights Act 2025 affects BtR scheme viability, operational models and long-term investment strategies

Build-to-Rent is entering a new regulatory and fiscal era. Mustafa Sidki of Thackray Williams’ Commercial Real Estate team outlines why now is the time for developers to review how upcoming changes affect scheme viability, operational models and exit strategies.

The Renters’ Rights Act 2025 represents the most significant reform of the private rented sector in a generation, with the main tenancy reforms coming into force on 1st May. While much of the debate has focused on buy‑to‑let landlords, the Act has equally important implications for developers and investors building and operating residential accommodation to rent, including Build‑to‑Rent (BtR) schemes.

Once fully implemented, the Act will abolish Assured Shorthold Tenancies (ASTs) and replace them with Periodic Assured Tenancies (PATs) for both new and existing tenancies. Fixed terms will effectively disappear, with tenancies becoming open‑ended and rolling from month to month. For developers and investors, this marks a fundamental shift away from traditional certainty of income over fixed rental periods and requires careful consideration of how schemes are let, financed and managed.

Under the new regime, tenants will be able to leave at any time on two months’ notice. Landlords, however, will only be able to recover possession if they can rely on one of the statutory grounds set out in Schedule 2 of the Housing Act 1988 (HA 1988). While these have been amended and widened by Section 3 and Schedule 1 to the Act –

including a ground for sale – in practice these routes are slower and more procedurally demanding, with minimum notice periods and the prospect of lengthy court proceedings. The abolition of “no‑fault” evictions means developers must consider how future asset management plans are affected, particularly where possession may be required for refurbishment, redevelopment or sale.

Commercial assumptions that have historically underpinned residential investment models also need recalibrating. Contractual rent review clauses will be void, with rent increases permitted only once every 12 months using the statutory procedure. Blanket pet bans will be unenforceable, and quarterly or annual rent payment structures will convert to monthly rent periods. For operators of large residential portfolios, these changes increase management complexity and reduce flexibility in reacting to market conditions.

Developers should also consider the transitional provisions. Existing ASTs will convert to periodic tenancies on 1st May 2026 unless a valid Section 21 or Section 8 notice has already been served. For schemes nearing completion or investors considering purchasing partly‑let assets, the timing of lettings and acquisitions in relation to the commencement date may have strategic importance.

Beyond tenancy reform, the wider fiscal landscape cannot be ignored. The Autumn Budget introduced higher income tax rates on property income from April 2027, further compressing returns for investors holding residential assets in their own name. While many BtR structures sit outside personal income tax, the combined effect of regulatory and tax change reinforces the need for robust stress‑testing of business plans.

For developers and investors committed to the residential rented sector, the Act does not remove opportunity, but it does demand a more operationally sophisticated approach. Early engagement with legal advisers can help ensure tenancy documentation, management processes and long‑term asset strategies are aligned with the new legal framework and remain commercially resilient in a more regulated environment.

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