The Renters’ Rights Act: What UK Landlords Need to Know in 2026

If you own residential property in the UK, the Renters’ Rights Act is one of the most significant pieces of legislation the private rented sector has faced in a generation. Coming into force on 1 May 2026, it fundamentally changes how landlords operate – while the tax environment continues to squeeze returns for those holding property in their personal name. For many landlords, now is the right time to take a step back and assess whether the structure and strategy of their portfolio still makes financial sense.

Key Insights

• The Renters’ Rights Act 2025 comes into force on 1 May 2026, abolishing Section 21 no-fault evictions and restricting rent increases to once per year
• All landlords must issue an official Information Sheet to existing tenants by 31 May 2026 or face a fine of up to £7,000
• Section 24 continues to hit higher-rate taxpayers holding property personally – many are paying tax on income they are not actually keeping
• Over 66,000 new buy-to-let limited companies were set up in 2025 – incorporation can restore full mortgage interest relief and reduce tax rates to as low as 19%
• From April 2026, Incorporation Relief must be actively claimed in your Self Assessment return – missing this could trigger an avoidable CGT charge
• If you are thinking of selling, the CGT annual exempt amount has fallen to just £3,000 and gains must be reported and paid within 60 days of completion

The Renters’ Rights Act Is Now Law – and the Clock Is Ticking

The Renters’ Rights Act 2025 received Royal Assent in October 2025 and comes into force on 1 May 2026. Its impact on landlords is significant and, for some, the Renters’ Rights Act may be the trigger they needed to reconsider their position in the market.

The centrepiece of the Act is the abolition of Section 21 – the no-fault eviction notice that has allowed landlords to reclaim a property without providing a reason. From 1 May 2026, that option no longer exists. Evictions will need to be justified through Section 8 grounds, which requires landlords to follow a more structured legal process. All existing tenancies will also convert to periodic rolling agreements, with tenants able to give two months’ notice to leave at any point.

Rent increases are also now tightly controlled. Landlords may only raise rents once in any twelve-month period, and any increase must reflect market rates and be served with at least two months’ notice. Practices such as accepting multiple months’ rent in advance are also now prohibited, with fines of up to £7,000 available to councils for first-time breaches.

There is also an immediate administrative obligation. The government requires landlords to issue an official Information Sheet to all existing tenants by 31 May 2026. Failure to do so is an offence in itself. If you have not already arranged for this to be distributed – either directly or through your managing agent – this should be a priority in the coming weeks.

Section 24 Continues to Erode Returns for Personal Landlords

For higher-rate taxpayers holding buy-to-let property in their own name, the Section 24 mortgage interest restriction remains one of the most damaging tax changes in recent years. Since its full implementation, individual landlords can no longer deduct mortgage interest as a business expense. Instead, they receive only a basic 20% tax credit – meaning higher and additional rate taxpayers are effectively subsidising a portion of their own mortgage costs out of post-tax income.

The result is that many landlords are paying tax on income they are not actually retaining. On a mortgaged property with modest margins, this can turn a notionally profitable investment into one that costs money to hold. If you have not reviewed your personal tax position in light of Section 24, it is worth doing so – the numbers may look quite different from when you first acquired the property.

At Ward Goodman, our tax specialists work closely with landlords to identify where returns are being unnecessarily eroded and what practical steps are available to address that.

Why So Many Landlords Are Looking at Limited Companies

It is no coincidence that 66,587 new buy-to-let limited companies were set up in 2025 alone. The corporate structure offers a straightforward solution to the Section 24 problem: limited companies are not subject to the mortgage interest restriction, meaning finance costs remain fully deductible against rental income. Profits are then taxed at corporation tax rates – 19% on profits up to £50,000 and 25% on profits above £250,000 – rather than at the 40% or 45% income tax rates applicable to higher-rate individual landlords.

For landlords building a portfolio for the long term, the difference in retained profit can be substantial, and that retained profit can be reinvested within the company to grow the portfolio more efficiently.

However, incorporation is not the right answer for every landlord, and the decision deserves careful analysis rather than a reflexive response to the tax headlines. Transferring properties into a limited company typically triggers both Stamp Duty Land Tax and Capital Gains Tax on the transfer, which can make the upfront cost significant. Mortgage finance through a limited company also tends to carry higher rates and arrangement fees than personal buy-to-let products.

There is also a procedural change to be aware of from April 2026: Incorporation Relief – which can in certain circumstances defer the CGT charge on incorporation – is no longer granted automatically. It must now be actively claimed through your Self Assessment return for the year of transfer. Missing this could result in an unnecessary and avoidable tax liability.

If You Are Thinking of Selling, Plan the Tax Position Carefully

Some landlords, faced with the combined pressure of the Renters’ Rights Act and a tightening tax environment, are considering whether to sell part or all of their portfolio. If that is on your radar, the Capital Gains Tax position needs careful thought before you proceed.

CGT on residential property currently stands at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. The annual exempt amount now stands at just £3,000, down from £12,300 as recently as 2022/23. For landlords sitting on substantial gains built up over many years, a much larger portion of any profit is now taxable than would have been the case just a few years ago.

The 60-day reporting and payment rule also means that CGT cannot simply be left to the annual Self Assessment return. Any gain arising on completion of a residential property sale must be reported and the estimated tax paid within 60 days. Missing this deadline attracts interest and penalties, so engaging a tax adviser before exchange of contracts is strongly recommended.

What to Do Next

Whether you are reassessing your portfolio structure, weighing up incorporation, planning a disposal, or simply trying to understand how the Renters’ Rights Act affects your obligations, the decisions you make in the coming months could have a meaningful long-term impact on your tax position and overall returns.

At Ward Goodman, our tax and financial planning teams work closely with landlords at every stage – from portfolio reviews and incorporation analysis through to property disposals and succession planning. If you would like an honest, tailored assessment of your position, please get in touch. We are here to help you make the right decisions for your circumstances.