The UK Renters’ Rights Act 2025: Implications for Student Accommodation Providers and Institutional Rental Housing Investors

The Renters’ Rights Act 2025 came into force in stages from 1 May 2026 and introduces the most significant reforms to the private rented sector in England in decades. The legislation fundamentally changes the operation of residential tenancies, including the abolition of assured shorthold tenancies, the removal of section 21 “no fault” evictions and the introduction of a new assured periodic tenancy regime. The reforms are significant for the living sectors, including purpose-built student accommodation (PBSA) and build-to-rent schemes (BTR), where investment performance and operational models have historically relied upon fixed-term tenancies, predictable occupancy cycles and certainty of possession and income. This GT Alert summarises the key changes introduced under the Act, the principal issues affecting the PBSA and BTR sectors and how the market has reacted to the reforms. Key Changes Under the Renters’ Rights Act 2025 One of the most significant reforms introduced under the Act is the abolition of assured shorthold tenancies and fixed-term assured tenancies. Existing and future residential tenancies now operate as assured periodic tenancies unless specifically exempted. In practical terms, this means tenants can terminate their tenancy on two months’ notice at any time and landlords can no longer rely upon fixed tenancy expiry dates to recover possession. The Act also abolishes section 21 “no fault” evictions. A section 21 notice previously enabled landlords to recover possession of a property at the end of a tenancy without having to establish fault on the part of the tenant. Now, landlords can recover possession only by relying upon one of the statutory grounds for possession under section 8 of the Housing Act 1988, which include grounds relating to tenant rent arrears, breaches of tenancy obligations, anti-social behaviour and other tenant fault-based circumstances, as well as certain landlord-specific grounds such as an intention to sell the property, occupy it as a principal residence or accommodate close family members. Other notable reforms include: restrictions on rent increases; tenants obtaining enhanced rights to challenge rent increases; the ability for tenants to refer proposed rent increases to the First-Tier Tribunal for determination, creating uncertainty as to the timing and ultimate level of rental uplifts; a prohibition on rental bidding practices; restrictions on payment of rent in advance; enhanced tenant rights relating to pets and discrimination protections; and expanded enforcement powers for local authorities. The revised rent increase regime is of particular significance to institutional landlords. Whilst annual rent increases remain possible through the statutory process, tenants are now afforded a formal mechanism to challenge proposed increases. In practice, this introduces additional administrative burden, potential delays and uncertainty around revenue forecasting, particularly where buildings or portfolios are subject to multiple concurrent challenges. For institutional investors and operators, these reforms represent not only legal changes, but a broader shift towards a more operationally intensive and compliance-driven residential market. Key Issues, Market Reaction and Practical Considerations PBSA The PBSA sector was one of the most vocal during the legislative process, as the traditional student accommodation model depends heavily on fixed academic year occupation cycles and certainty of vacant possession. Without sector-specific exemptions, the abolition of fixed-term tenancies raised concerns that PBSA schemes could become operationally misaligned with the academic calendar. Key concerns included: students terminating tenancies on two months’ notice during the academic year; increased void risk and reduced occupancy certainty; vacant possession ahead of each academic intake cycle; and restrictions on rent in advance for international students. In addition to operational concerns, investors noted that the reforms could undermine one of the key attractions of PBSA as an asset class: income visibility and alignment with the academic cycle. The prospect of students leaving accommodation mid-year, together with wider tenant protections relating to rent increases and possession, caused concern regarding occupancy forecasting, income certainty, investment underwriting assumptions and the attractiveness of the sector to institutional capital. Following significant industry lobbying, the Government introduced a specific exemption regime for qualifying PBSA schemes through secondary legislation. The exemption applies to qualifying PBSA providers that meet prescribed criteria, including membership of an approved Code of Practice, allowing them to continue using fixed-term student tenancies outside the assured tenancy regime and thereby preserve alignment with the academic year. Where the relevant conditions are satisfied, PBSA providers can continue granting fixed-term common law tenancies outside the assured tenancy regime. The exemption has been welcomed by the sector and avoided what many participants viewed as a potentially fundamental disruption to the PBSA operating model. However, the legislative process has highlighted the extent to which living sector investment performance is influenced by political and regulatory considerations. Institutional investors are therefore placing greater emphasis on regulatory risk assessment, compliance capability and operational resilience when evaluating PBSA opportunities. In order to qualify for the exemption, PBSA operators may wish to: ensure continued membership of the ANUK or Unipol Code of Practice, as compliance with an approved code is one of the conditions that must be satisfied for the PBSA exemption to apply; review tenancy documentation and letting arrangements to ensure that tenancy agreements are properly structured as fixed-term common law tenancies that fall within the PBSA exemption, rather than assured tenancies, and that operational practices remain consistent with the conditions of the exemption; and ensure compliance with the transitional provisions of the Act and any associated commencement regulations, including reviewing existing tenancy portfolios to confirm that the correct legal framework applies to tenancies granted before and after the relevant commencement dates. The final form of the legislation was generally viewed by the PBSA market as materially more workable than initially anticipated. However, operational compliance and management capability are increasingly viewed as critical considerations for investors and lenders. BTR Unlike PBSA, the BTR sector does not have a bespoke exemption and must therefore adapt fully to the new regime. Key concerns for the BTR sector include: increased turnover and void risk; reduced occupancy certainty; restrictions on rent review mechanisms; the need for more cautious underwriting assumptions; and uncertainty regarding the revised possession regime. The removal of fixed-term tenancy structures represents a fundamental shift for many BTR operators. Whilst institutional landlords have historically focused on resident retention and customer service, investment models have nevertheless been underpinned by assumptions around predictable occupancy and rental growth. The new regime reduces certainty around both. The rent increase challenge process has drawn particular attention from the BTR sector. Landlords may issue statutory rent increase notices, but tenants can challenge proposed increases through the Tribunal process. Investors and operators have pointed to the risk that tenants may increasingly utilise this mechanism as a means of delaying rent increases, as triggering a Tribunal determination may postpone implementation of a proposed increase for a significant period. During that period, the landlord may be unable to realise the increased rental income originally anticipated. Across large institutional portfolios, even a relatively small number of challenges could have a material impact on cash flow forecasting, business planning and valuation assumptions. The possession regime has generated similar concerns. Whilst possession remains available through statutory grounds, many landlords remain concerned about the practical realities of enforcement through an already pressured court system. The prospect of longer court timetables, increased evidential requirements and higher legal costs has generated concerns regarding the speed and certainty with which problematic tenancies can be managed. Institutional operators have also highlighted the cumulative effect of these reforms. Increased legal costs, greater compliance obligations, more frequent engagement with Tribunal and court processes and enhanced administrative requirements all increase operating expenditure. There is concern that these additional costs will ultimately be reflected in investment returns and underwriting assumptions. From a market perspective, the reaction has been mixed. Whilst many institutional landlords remain committed to the sector, there is evidence of increased caution around new acquisitions, development activity and long-term capital allocation decisions. Investors are increasingly focused on the balance between regulatory risk and expected returns, particularly when compared against alternative real estate sectors and alternative jurisdictions. The enhanced security of tenure provided to residents is a central policy objective of the Act and is likely to be welcomed by many tenants. However, investors have questioned whether increased security and reduced landlord flexibility may have unintended consequences if capital deployment into the sector becomes more constrained. The long-term impact of the reforms may therefore depend on whether tenant protections can be balanced against maintaining sufficient investor confidence to support continued housing delivery. Despite these concerns, the broader market response has been that the reforms may accelerate trends already emerging within institutional BTR, including greater emphasis on customer experience, resident retention and operational sophistication. BTR operators may wish to: review tenancy agreements and operational procedures; reassess rent review and income management strategies; review possession strategies and section 8 procedures (including identifying and evidencing the relevant statutory grounds for possession, complying with notice requirements and managing court proceedings where possession action is required); and strengthen compliance and governance systems. Conclusion The Act represents a significant shift for the United Kingdom living sectors. While the objective of improving tenant security and protections is clear, institutional landlords continue to express concerns regarding delays to rent increases, increased reliance on Tribunal processes, longer possession timelines, rising legal costs and the broader operational burden associated with compliance and enforcement. The reforms represent a rebalancing of the relationship between landlords and tenants. Enhanced security of tenure, greater protection against rent increases and the removal of section 21 “no fault” evictions are likely to be welcomed by many tenants. However, institutional landlords and investors are unlikely to absorb the commercial impact of these reforms without adjustment. Increased compliance obligations, greater management costs, potential delays in possession proceedings and uncertainty around rental growth have financial consequences. Investors may require higher returns or reconsider the level of capital allocated to the sector. This could have wider implications for the residential market, potentially reducing investment in new rental housing, limiting consumer choice and placing further pressure on rents in areas where demand continues to outstrip supply.