LODGE: A Living Sector Update - Summer 2025
Renters’ Rights Bill and the Build to Rent Sector: Where are we now?
By Laura Bushaway and Lauren Fraser
The Renters’ Rights Bill has almost completed its passage through the House of Lords. Report stage in the House of Lords took place on 1 July 2025 with the Third Reading on 21 July. The Bill will now proceed to the ping pong process whereby amendments of the House of Lords go back to the House of Commons to be voted upon. The House of Commons are scheduled to debate the Bill on 8 September 2025. For more information about a specific issue in the Bill which could affect PBSA providers, please read our Insight on PBSAs.
What are the key provisions of the Bill which will impact the BTR sector?
Abolish fixed term tenancies
The Bill will abolish fixed term Assured Shorthold Tenancies (“ASTs”) and so called “no-fault” evictions. Landlords will be prevented from serving Section 21 Notices giving at least 2 months’ notice to a tenant to vacate the premises. Instead, all tenants will become assured periodic tenants occupying the property on a month-by-month basis. A tenant will be able to give 2 months’ notice to a landlord if they want to leave the premises. Landlords, however, will need to prove a statutory ground in order to obtain possession. The Government has sought to strengthen those grounds of possession. The most commonly relied upon mandatory ground for possession is a specified amount of rent arrears, which, under the Bill will require a higher threshold of arrears to be established than under the current law. The new proposed ground 8 will require there to be at least 3 months’ rent arrears both at the date of service of the Section 8 Notice and the date of the hearing. Under the current law, there must be at least 2 months’ rent arrears to rely on ground 8. This means that stakeholders in the build to rent sector will need to factor in higher arrears before seeking possession. In addition, the removal of fixed term tenancies will make it more difficult to predict tenant turnover which could impact investment/funding arrangements.
Increasing rent
Another significant concern for build to rent providers is the mechanism for increasing rent. Existing arrangements are likely to mean that rent increases are built into the renewal of a tenancy at the expiry of the fixed term. However, since assured periodic tenancies will have no “end date”, landlords will need to rely on the statutory process for increasing rent. This requires landlords to serve a statutory notice of increase of rent giving at least 2 months’ notice of the increase. Tenants will be able to challenge rent increases in the First-Tier Tribunal (Property) Chamber (“FTT”). Once the Tribunal has determined the open market rent for the property, this will be payable from the later date of determination rather than the date of the notice of increase. There is a concern that a significant number of tenants will seek to challenge rents because there is no downside to them and even if the Tribunal determine that there is a minimal increase in rent under the open market rent assessment, any increase is delayed to the date of the Tribunal determination. Rental increases will be restricted to one per year. A notice of increase of rent can only be served after one year has elapsed since the date of determination by the Tribunal, or date when the last rent increase took effect. In addition, there is a general right to challenge the rent in the first 6 months of the tenancy. The new rent will be assessed on the basis of the open market rent for the property. Whilst the basis for assessment will not change under the Bill, there are concerns that because the Tribunal currently only deals with a handful of open market rent assessments each year, in real terms that assessment will amount to a form of “rent control”, despite the Government confirming during the passage of the Bill that it is opposed to the implementation of any rent controls under the legislation.
Requests to keep pets
Other provisions of the Bill which are likely to impact build to rent providers are the terms implied into all assured tenancies that a tenant has the right to request consent to keep a pet at the property and the landlord cannot unreasonably refuse consent. A landlord must respond to a request within 28 days and where consent is granted, in the original draft of the Bill, the landlord could require the tenant to take out pet insurance or reimburse the costs incurred by the landlord of doing so. Obtaining pet insurance will be permitted under the Tenant Fees Act 2019, by an amendment under the Bill. However, during the debates this was amended to enable a landlord to require a pet damage deposit instead of insurance. Operationally, some build to rent providers have existing arrangements for tenants to keep pets but unless there are good reasons to refuse consent, there may be problems limiting pets to particular floors or buildings within a build to rent operators’ portfolio.
Increasing rent
Another significant concern for build to rent providers is the mechanism for increasing rent. Existing arrangements are likely to mean that rent increases are built into the renewal of a tenancy at the expiry of the fixed term. However, since assured periodic tenancies will have no “end date”, landlords will need to rely on the statutory process for increasing rent. This requires landlords to serve a statutory notice of increase of rent giving at least 2 months’ notice of the increase. Tenants will be able to challenge rent increases in the First-Tier Tribunal (Property) Chamber (“FTT”). Once the Tribunal has determined the open market rent for the property, this will be payable from the later date of determination rather than the date of the notice of increase. There is a concern that a significant number of tenants will seek to challenge rents because there is no downside to them and even if the Tribunal determine that there is a minimal increase in rent under the open market rent assessment, any increase is delayed to the date of the Tribunal determination. Rental increases will be restricted to one per year. A notice of increase of rent can only be served after one year has elapsed since the date of determination by the Tribunal, or date when the last rent increase took effect. In addition, there is a general right to challenge the rent in the first 6 months of the tenancy. The new rent will be assessed on the basis of the open market rent for the property. Whilst the basis for assessment will not change under the Bill, there are concerns that because the Tribunal currently only deals with a handful of open market rent assessments each year, in real terms that assessment will amount to a form of “rent control”, despite the Government confirming during the passage of the Bill that it is opposed to the implementation of any rent controls under the legislation.
Requests to keep pets
Other provisions of the Bill which are likely to impact build to rent providers are the terms implied into all assured tenancies that a tenant has the right to request consent to keep a pet at the property and the landlord cannot unreasonably refuse consent. A landlord must respond to a request within 28 days and where consent is granted, in the original draft of the Bill, the landlord could require the tenant to take out pet insurance or reimburse the costs incurred by the landlord of doing so. Obtaining pet insurance will be permitted under the Tenant Fees Act 2019, by an amendment under the Bill. However, during the debates this was amended to enable a landlord to require a pet damage deposit instead of insurance. Operationally, some build to rent providers have existing arrangements for tenants to keep pets but unless there are good reasons to refuse consent, there may be problems limiting pets to particular floors or buildings within a build to rent operators’ portfolio.
Property database
Underpinning the Bill is a new property database which will require landlords to have an active listing. Much of the detail about how the database will operate and what information will be required to achieve an active listing will be contained in secondary legislation, which is not currently available. However, build to rent operators will need to factor in additional administrative costs to their business model in registering and updating their listings on the property database.
County Court capacity
There are no provisions in the Bill to deal with the potential increase in possession claims in the County Court or challenges to rent in the FTT. Landlords can currently use an accelerated possession procedure where a Judge will usually make a possession order without a Court hearing. As landlords will be required to prove a ground for possession, the majority of possession claims, once the Bill becomes law, will require at least one Court hearing. During the debates in Parliament, the Government provided assurances that there is sufficient capacity and the possession process will ultimately be digitised but if the route to a possession order takes longer than under the existing law that will be a concern to build to rent operators because the model is based on maximum occupancy rates.
Are there any provisions which will impact the BTR sector which have been added to the Bill during its passage?
Restrictions on rent in advance
Since the Bill commenced its passage through Parliament in September 2024, there have been a number of amendments. The Government has restricted the ability for a landlord to request rent to be paid in advance. This is currently a useful option where a tenant does not meet affordability criteria or is in full time education. It provides a low risk option for landlords to proceed with tenants who may not otherwise be in a position to enter into a tenancy. As a result, there is likely to be an increase in the use of guarantors to guarantee the obligations of a tenant under an assured periodic tenancy. However, that may be a less attractive proposition to potential guarantors where the tenancy is effectively “open ended” which means they could be on the hook for an unspecified period of time.
Transitional provisions
The Government has also altered the transitional provisions. The Government will implement the Bill on a commencement date (to be announced). As from that date all existing ASTs will be converted to assured periodic tenancies. Where a Section 21 Notice has been served and possession proceedings sent to the Court immediately before the commencement date, the Section 21 Notice will remain valid until those possession proceedings are concluded. If a Section 21 Notice has been served before the commencement date but the landlord has not yet sent possession proceedings to the Court (whether or not because the Section 21 Notice has not yet expired), the landlord will be able to start possession proceedings provided that those proceedings are sent to the Court within 6 months after the service of the Section 21 Notice or 3 months beginning with the commencement date, if the 3 month period ends before the 6 month period. So, the longstop date for possession proceedings would be 3 months from the commencement date. The Bill contains identical provisions for Section 8 Notices relying on a ground of possession served before the commencement date except that technically speaking a Section 8 Notice remains valid for 12 months from the date of service (not 6 months as for Section 21 Notices). We are tracking developments on our Essential Residential Hub and our timeline: Evolution of the private rented sector. This insight has been prepared as a general guide only and does not constitute advice on any particular circumstances. Please seek advice on your specific circumstances.
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