Renters' Rights Bill: what it means for lenders

In this article, we outline some of the key changes under the Bill, what they mean for lenders, and some steps you may want to consider now to prepare for what lies ahead.

Key changes in the private rented sector

Subject to further amendments in Parliament, the Bill is expected to receive Royal Assent in September/October 2025 with an implementation date which is yet to be determined. Some of the most notable changes include:

• End of 'No-Fault' Evictions: Section 21 notices will be abolished. All tenancies will become periodic from day one, ending the fixed-term model. Tenants will be able to stay in their home until they decide to end the tenancy by giving two months’ notice. Landlords will only be able to regain possession using updated Section 8 grounds, which will require proof and, in some cases, court involvement.
• Longer notice periods and stronger tenant protections: Where a landlord wishes to sell, move in or house family members, they must now give tenants at least four months’ notice. Additionally, there will be a 12-month protected period from the start of each tenancy, during which these grounds cannot be used.
• Rent control measures: Rent increases will be limited to once per year to the market rate, must be delivered via statutory notice (Section 13), and can be challenged by tenants through the First-tier Tribunal. Any contractual rent review clauses in tenancy agreements will become void. On the current draft of the Bill, tenants are able to challenge any proposed rent increase in the First-tier Tribunal with no potential cost consequences on the tenant for doing so. Once the rent has been finally determined by the Tribunal, that is the date upon which the new rent will be payable (as opposed to being backdated). The concern here is that there will be a significant incentive on tenants to challenge the rent increase, with no real disadvantage.
• Ban on bidding wars and upfront rent: Landlords and letting agents will be required to publish an asking rent for their property and will be banned from accepting offers above the listed rent. Tenants can also only be asked to pay up to one month’s rent upfront.
• Decent homes standard: Landlords will be under a legal duty to meet the Decent Homes Standard (DHS) and promptly deal with health hazards such as mould. Local authorities will be given stronger enforcement powers.
• PRS database and ombudsmen: All landlords of assured and regulated tenancies must register themselves and their properties in a new public database and could be subject to penalties if they market or let out a property without registering it. Landlords will also be legally required to join a new PRS Ombudsman scheme which will handle tenant complaints and may award compensation or order remedial action.
• Harsher penalties for non-compliance: Rent Repayment Orders (RROs) will be extended to cover more offences, with the maximum penalty increasing from 12 to 24 months’ rent.

What this means for lenders

The Bill will reshape the risk landscape for buy-to-let and portfolio lending. Here are some key considerations:

• Slower recovery and enforcement: Without Section 21, lenders and borrowers will rely solely on the updated Section 8 grounds for possession, increasing reliance on court proceedings and extending enforcement timelines. Four-month notice periods and 12-month protected tenancy periods delay a borrower’s ability to regain possession and, in turn, the lender’s recovery.
• Pressure on yields and valuations: Rent caps, limited flexibility for landlords, and additional compliance obligations are likely to reduce property yield, especially for smaller landlords. This will increase the risk of defaults and depressed asset value. Some investors are already exiting the market, reducing demand and softening prices for tenant-occupied assets.
• Heightened compliance burden: Borrowers will be responsible for PRS registration, deposit protection, safety certifications and compliance with DHS standards. Non-compliance could lead to enforcement action, reputational damage and potential loss of rental income, posing an indirect risk to lenders.
• Reputational and regulatory exposure: Local councils will have powers to obtain information from lenders during enforcement activity. Lenders could become entangled in disputes where borrowers are non-compliant, with potential knock-on reputational impact.

Practical actions for lenders

You may want to consider taking the following steps to stay ahead of these changes:

Final thoughts

The Renters' Rights Bill represents a structural shift in the rental market, embedding a much stronger regulatory framework. While the changes are designed to improve tenant security and property standards, they introduce material uncertainty and complexity for landlords and, by extension, for you as a lender.

Taking early steps to understand, adapt and engage with borrowers on compliance will help safeguard your portfolio and lending strategies.
If you'd like to discuss how the Bill could impact your position or explore practical ways to mitigate risk, our Real Estate Finance team is here to help.

For more information or advice, please contact Lauren Roffe in our Commercial Property team.