"Our clients are all saying the same thing: the new liabilities and reduced flexibility being introduced by The Renters' Rights Act 2025 from 1 May is the final straw in making their property investments no longer commercially or practically viable"
- Mustafa Sidki - Thackray Williams
Kent and London law firm Thackray Williams has received a wave of last-minute instructions from landlords looking to sell their buy-to-let portfolios before the Renters' Rights Act comes into force this Friday.
The firm's litigation team has been instructed to seek possession on behalf of landlords wishing to exit the market entirely, alongside a surge in last-minute Section 21 no-fault eviction notices covering both flats and houses.
"Our clients are all saying the same thing: the new liabilities and reduced flexibility being introduced by The Renters' Rights Act 2025 from 1 May is the final straw in making their property investments no longer commercially or practically viable, particularly in a challenging economic climate and with other changes also in the pipeline," said Mustafa Sidki, contentious construction litigation partner at Thackray Williams (pictured).
The Renters' Rights Act represents the most significant reform of the private rented sector in a generation. Its main provisions, taking effect from Friday, include the abolition of Section 21 no-fault evictions, amended grounds for possession under Section 8, the removal of assured shorthold tenancies in favour of periodic assured tenancies, limits on rent increases, new anti-discrimination measures, and the right for tenants to request permission to keep a pet.
"The changes being introduced by The Renters' Rights Act this Friday mean it will take longer and cost more for a landlord to regain possession of a rental property," Sidki explained. "This reduced flexibility is causing many landlords to rethink their investment strategies, especially as other factors mean they are facing reduced, and even negative, cash flow while also facing increased admin and responsibilities."
The financial pressures extend well beyond the new tenancy rules. Landlords have already lost the ability to deduct full mortgage interest from rental income under Section 24 of the Finance Act, and Rachel Reeves added a further 2% tax on property income in her November 2025 budget.
Fixed-rate buy-to-let mortgages taken out at 1-2% are maturing this year, with refinance rates of 5-6% now on offer. Meanwhile, maintenance costs, insurance premiums and local authority licensing fees have all risen due to inflation.
For flat owners, the picture is particularly difficult. Service charges are rising sharply, and while they can be challenged, freeholders are arguing that their own costs have increased sufficiently to make the rises reasonable.
Quarterly income returns under Making Tax Digital, introduced at the start of this month, have added a further administrative burden. Looming EPC C upgrade requirements under the Decent Homes Standard 2026 are pushing many landlords toward the exit.
"With many landlords facing costly upgrades to bring their properties up to EPC C by 2030, many of them are saying the finances simply no longer add up and are rushing to beat the legislation to be able to divest their portfolios," Sidki added.
The firm's conveyancing team is bracing for a corresponding increase in instructions. "We're anticipating increased instructions for our conveyancing team as these landlords put their properties on the market as soon as they are able, which in turn could negatively impact property prices, particularly in areas that have traditionally had a strong rental sector," said Claire Josef, conveyancing partner.
Two categories of assured shorthold tenancy will not automatically convert to periodic assured tenancies on 1 May: those with a valid pending Section 21 notice and those with a valid pending Section 8 notice where a tenant has breached the tenancy. Under Schedule 6 of the Renters' Rights Act, a Section 21 notice served before 1 May remains valid, and the tenancy continues as an assured shorthold tenancy until the landlord obtains possession, the notice lapses, or a judge rules it invalid.
"While many landlords have planned ahead for this, we are seeing a significant number of last-minute applications to serve Section 21 notices by Thursday from landlords who have decided property investment is now too challenging to be viable," Sidki noted.
