Renters’ Rights Act 2025
Market Overview for London 2025
The London property market in 2025 was mixed, with values broadly flat or marginally down depending on location and asset type. Activity increased ahead of the April 2025 stamp duty changes, before slowing following the Budget as tax and political uncertainty affected confidence.
Average rents remained high, typically ranging between £2,700 and £2,740 per month, with prime boroughs exceeding £3,500. Rental growth was modest at approximately 1.6% year-on-year, but demand continued to outstrip supply. Investor capital growth was limited to around 2%–4%, increasing the importance of asset selection, high-demand areas, and HMOs. Developers continued to see demand for homes and commuter properties, although London underperformed compared with other UK regions.
Budget Update
From April 2027, income tax on rental income will increase by 2%. A new annual “mansion tax” will apply to homes valued above £2 million. Income tax thresholds will remain frozen until 2031, meaning a growing proportion of rental income will be taxed at higher rates over time.
There were no changes to existing stamp duty thresholds and no introduction of national insurance contributions on rental income.
Overview of the Renters’ Rights Act 2025
The Renters’ Rights Act 2025 applies to all landlords and letting agents in England. It introduces wide-ranging tenancy reform, enhanced quality standards, and increased tenant protections, alongside expanded enforcement powers for local authorities. The stated aim of the legislation is to deliver a fairer private rented sector.
Important Dates and Phasing
Local authority enforcement powers began on 27 December 2025. Further statutory guidance is expected in early 2026, with an additional Government document anticipated in March 2026.
Section 21 notices can be used only until 30 April 2026. Phase 1 of the reforms begins on 1 May 2026, when the core changes take effect. Phase 2 will follow in late 2026, with further structural reforms, and Phase 3 will commence from 2030 onwards.
End of Section 21 (“No-Fault Evictions”)
No-fault evictions will be abolished. All possession claims will need to rely on section 8 grounds, which will be strengthened and supplemented by new mandatory grounds. Tenants will have stronger security of tenure, and notice periods will be adjusted depending on the basis for possession.
Additional Changes
From 1 May 2026, new rules will apply to how properties are marketed and let. Tenant rights relating to pets will change, and new anti-discrimination rules will apply, including protections for tenants in receipt of benefits and for families.
All marketing and tenancy decisions must comply with the legislation. Local authorities will have the power to impose financial penalties on landlords and agents for non-compliance. New controls will also apply to rent increases.
How We Can Assist
We provide advice on
- How can you prepare now for implementation
- Your tenant’s new rights
- Your new obligations and potential penalties for failure to comply
Speak to a Solicitor today
If you require any assistance or would like to find out your options regarding Property Litigation please contact us by sending an email to info@lyoncroft.co.uk, calling us on 020 3576 7170, or complete a contact-us form. Our offices are in Park Royal, London and you can find our address at the bottom of the page.
This article has been authored by Amanda Airey, Legal Director of Lyon Croft Law.
