Why Q1 is a crucial period for landlords and property professionals

The November Budget’s additional 2% property income tax, which will bring in new tax bands of 22%, 42%, and 47% in 2027, has compounded existing pressures from Section 24 mortgage interest restrictions. For many landlords, the economics of buy-to-let have tipped into negative territory. While this article does not constitute financial advice, the commercial reality is clear: landlords holding properties in their own name face higher tax burdens from April 2027. 

Compounding the situation is the imminent implementation of the Renters’ Rights Act (the Act) on 1 May. The sweeping changes mean that landlords who want to reshape their portfolios need to act quickly, before the new legislation makes it much harder to recover possession. 

For advisers, this is the moment to help clients reassess their long-term strategy, considering whether to consolidate holdings, restructure ownership, or exit underperforming assets before the window closes.

Countdown to reform: key dates and what they mean

The Act will roll out in three phases:

• Phase 1 (May 2026): Abolition of Section 21 notices, end of Assured Shorthold Tenancies (ASTs), introduction of Periodic Assured Tenancies (PATs), rent increase limits, anti-discrimination measures, and tenants’ right to request pets.

• Phase 2 (Late 2026): Launch of the PRS database and Landlord Ombudsman scheme.

• Phase 3 (Post-consultation): Extension of the Decent Homes Standard and Awaab’s Law to the PRS.

From 1 May 2026, all ASTs will convert into PATs, ending fixed terms and creating rolling tenancies. Compliance documents and deposit registrations will carry over, but contractual clauses such as fixed terms and break clauses will become unenforceable.

For property professionals, these changes demand a proactive approach: reviewing tenancy agreements now, updating client communications, and preparing for a regulatory landscape where flexibility and compliance will be paramount. But this is not simply about compliance; it is about future-proofing investment strategies, mitigating risk, and maintaining profitability in an environment where regulatory change will redefine landlord-tenant dynamics. Acting early gives landlords and advisers the flexibility to plan rather than react under pressure.

Section 21 Notices: your last window of opportunity

For landlords seeking possession without fault, the clock is ticking. Section 21 notices served before 1 May 2026 remain valid under transitional provisions, provided court proceedings commence by 31 July 2026 or before notice expiry. This transitional period offers a critical opportunity to act decisively. 

To serve a valid Section 21 notice, landlords must ensure:

• Compliance with EPC, gas safety, and tenancy deposit rules

• Provision of the government’s “How to Rent” guide

• Avoidance of retaliatory eviction restrictions under the Deregulation Act 2015

Failure to meet these requirements could render the notice invalid, leaving landlords exposed to prolonged tenancies under the new regime. Advisers should prioritise audits of compliance documentation and advise on best practice for service and proof to avoid costly delays.

Possession after May 2026: why it gets harder

Failure to act now risks being locked into PATs with limited exit routes. After May, possession will rely solely on Section 8 grounds, which are narrower and often discretionary. 

Once the Act takes effect:

• Fixed-term clauses vanish: Attempting to enforce them could trigger civil penalties under new Section 16E of the Housing Act 1988

• Break clauses become redundant: Tenants can leave with two months’ notice; landlords can only terminate on valid Section 8 grounds

• Rent reviews restricted: CPI/RPI-linked clauses will be void. Increases must follow the statutory Section 13 process, capped at once every 12 months

• Pet bans prohibited: Consent cannot be unreasonably withheld

• Rent periods standardised: Quarterly or annual rents will convert to monthly

For advisers, this means recalibrating tenancy agreements and advising clients on risk exposure. It also means preparing for longer possession timelines and potential disputes, which could significantly impact cash flow and asset planning.

Other game-changing provisions you need to know

Grounds for possession under Schedule 2 of the Housing Act 1988 will be amended, with extended notice periods. Selling a property will require four months’ notice, and court delays could stretch possession timelines to nine months or more. Critically, there is no mandatory ground for repeated serious arrears beyond Ground 8, which demands three months’ arrears and carries a four-week notice period. 

This creates a heightened risk profile for landlords managing tenants with poor payment histories. Advisers should factor these timelines into strategic planning and consider alternative dispute resolution options to mitigate prolonged litigation.

Practical steps for serving notices and staying compliant

Landlords and advisers should:

• Serve Section 21 notices well before May 2026

• Use correct forms and service methods

• Obtain proof of service and diarise deadlines

• Continue rent demands until possession is enforced

Accelerated possession remains available for Section 21 claims but excludes rent arrears. Non-compliance with deposit rules may bar its use, requiring standard possession proceedings. Advisers should ensure landlords understand these nuances and maintain meticulous records to safeguard against procedural challenges that could derail possession claims.

Looking Ahead: Strategic Advice for Landlords and Advisers

The Renters’ Rights Act is more than a compliance challenge – it is a catalyst for strategic portfolio review. Advisers should guide landlords through:

• Exit strategies for underperforming assets

• Risk modelling for PATs and rent control

• Long-term planning for regulatory compliance and tenant relations

The message is clear: delay is costly. Acting now ensures landlords retain control over their assets and advisers demonstrate proactive value. Those who anticipate change and adapt early will be best positioned to thrive in a market where legislative reform is reshaping the fundamentals of property investment.

Mustafa Sidki is a Commercial Real Estate Litigation Partner at Thackray Williams.