A surge in last-minute instructions from landlords seeking to sell has emerged ahead of the Renters’ Rights Act 2025 coming into force this Friday.
Thackray Williams, which operates across London and Kent, said its litigation team has seen an increase in instructions from landlords aiming to regain possession of properties prior to sale, alongside a rise in Section 21 notices being served on individual tenancies.
“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,” says Mustafa Sidki, Contentious Construction Litigation Partner.
The Renters’ Rights Act 2025 introduces wide-ranging reforms to the private rented sector, including the end of Section 21 evictions, new possession grounds, the shift from fixed-term tenancies to periodic agreements, limits on rent increases, anti-discrimination rules, and a tenant right to request permission to keep pets.
Sidki commented: “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.
“This reduced flexibility is causing many landlords to rethink their investment strategies, especially as other factors mean they are facing reduced – and even negative cashflow – while also facing increased admin and responsibilities.”
“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,” adds Conveyancing Partner, Claire Josef.
“Many portfolios are no longer commercially viable due to landlords losing the ability to deduct full mortgage interest from rental income (under Section 24 of the Finance Act) and the introduction of an additional 2% tax on income from property by Rachel Reeves in her November 2025 budget,” expands Mustafa.
“Additionally, fixed-rate buy-to-let mortgages of 1-2% are coming to an end this year, with new re-finance rates of 5-6% being offered,” he continues, “while the costs of maintaining properties, insurance premiums and local authority licensing fees have all risen this year due to inflation.
“For flat owners, service charges are also going up a lot due to inflation. Whilst service charges can be challenged, freeholders are saying that their own costs are increasing and thus the increases would be deemed reasonable.
“On top of this, landlords now have additional admin with the requirement of quarterly income returns introduced under Making Tax Digital at the beginning of this month.
“With many landlords facing costly upgrades to bring their properties up to EPC C by 2030 under the Decent Homes Standard 2026, 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.”
There are two categories of ASTs which will not become PATs on 1 May 2026; first where there is a valid pending Section 21 notice or secondly where there is a valid pending Section 8 notice to start eviction proceedings when the tenant has breached the tenancy.
Paragraphs 3 and 4 of Schedule 6 of the Renters’ Rights Act prescribe that a valid Section 21 notice served before 1 May 2026 will remain valid, and the tenancy will remain an AST until the landlord obtains possession and the tenancy ends, the notice lapses or a judge decides that the notice is 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 added.
