Some key reforms to the private rented sector came into force on 1st May 2026 under the Renters’ Rights Act. Deemed as long overdue by tenants and groups advocating for tenants’ rights, these reforms have included changes to the rents that are charged.
Reduced upfront costs, rent increase restrictions and an end to rental bidding have all been confirmed in the rental reforms. Here, we’ve detailed what each of those changes entails and how landlords have reacted to these reforms.
A cap on upfront rental payments
One issue frequently experienced by tenants is the requirement by some landlords to pay large upfront sums, such as 3, 6 or even 12 months’ rent in advance. Having to find such a significant amount puts the affordability of rental accommodation out of reach for many tenants. They either have to miss out on a property they were hoping to move into or give up on the idea of renting altogether.
To address this problem, a cap has now been put in place under the Act. The new legislation stipulates that a maximum of one month’s rent can be asked for, making renting more accessible. This sum can be requested once an agreement has been signed and before the tenancy starts. Any clause in the tenancy agreement that refers to additional rental payments in advance or rent to be paid in advance of the due date will be void.
Rent increase restrictions
Another key issue tackled under the Act is rent increases. Many tenants have been subject to huge rent hikes and have had rent review clauses included in their tenancy agreements. These rent increases can cause severe affordability issues for tenants, with many being unable to pay the higher amounts. Unfortunately, this is a tactic some landlords use to force tenants to leave their properties.
Now, as part of the first phase of the Renters’ Rights Act, which also includes an end to Section 21 ‘no fault’ evictions, rent increases have been restricted to once per year. A Section 13 notice must be served, giving 2 months’ notice, and rent increases cannot exceed the market rate.
These changes will increase tenant security so that ‘backdoor evictions’ are no longer a concern. They’ll also considerably improve affordability in the private rented sector.
No more rental bidding
The issue of rental bidding has also been dealt with under the Renters’ Rights Act. Tenants have often found themselves having to bid against other tenants to secure the property they want. This pushes rents up considerably and impacts the affordability of tenants.
From 1st May 2026, this practice has been stopped. All rental properties must be advertised for a fixed price. Bids for amounts higher than that price cannot be asked for or accepted, either by landlords or letting agents.
This aims to make the private rented sector fairer and more transparent.
How have landlords reacted to these rent changes?
Whilst all of these changes are beneficial for tenants, many landlords have raised concerns. The restrictions on rent increases and the stricter process to follow, coupled with higher legal and tax costs, can make it hard to make a profit when renting out properties.
Along with the reduced flexibility now that Section 21s cannot be used and fixed-term assured shorthold tenancies have been abolished, many have reassessed their positions as landlords.
Some have moved their portfolios into limited companies to help mitigate the financial pressures. Others served notice on their existing tenants before the deadline was reached that ended the use of Section 21s. Some landlords, feeling more cautious over the stricter controls detailed in the Act, have undertaken stricter vetting processes for tenants, including an increased demand for tenants to have guarantors or to have higher incomes.
Other landlords, however, decided to cut their losses, selling their properties ahead of the rental reforms. According to Auction House, an increase of 70% in tenanted property listings was experienced in April 2026 compared with the same month of the previous year. A knock-on effect of this property surge is that experienced investors are now buying tenanted properties at significant discounts.
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The rental reforms under the Renters’ Rights Act can, understandably, raise concerns for landlords. However, the Act aims to make the private rented sector a fairer place, with unscrupulous landlords either having to comply with the new standards or leave the rental market altogether. Either way, good landlords who operate with high standards stand to benefit from a level playing field and reduced competition.
We’re here to help you where we can. Whether you want to review your portfolio structure, discuss your refinancing options or consider your long-term strategy in light of these reforms, give us a call on 01322 907 000.