Understanding the New Costs for Landlords Under the Renters’ Rights Act 2025

Introduction to the Renters’ Rights Act 2025

The Renters’ Rights Act 2025 became law on 27 October 2025 after receiving Royal Assent. Although the Act has now been approved, it is not fully active yet. The first set of rules will start on 27 December 2025, and some major changes—such as banning Section 21 evictions, restricting advance rent payments, ending fixed-term tenancies, and limiting rent increases to once per year—will come into force on 1 May 2026. Other provisions will be introduced gradually over time through additional regulations.

What the Act Means for Landlords

The Act is designed to give tenants stronger rights, which means new responsibilities and extra costs for landlords.

Mandatory Registration

Landlords will need to register on a new Private Rented Sector Database and pay a fee to sign up online.

Decent Homes Standard

Properties must meet a new Decent Homes Standard, which may require landlords to invest in improvements or repairs to ensure compliance.

Energy Performance Requirements

In the future, landlords may also need to ensure their property has a minimum EPC rating of C or higher, which could involve upgrade costs.

Pet Permissions

Tenants will have more freedom to keep pets. Landlords cannot unreasonably refuse permission. Although an extra deposit can be requested for potential damage, it cannot exceed three weeks’ rent. If damage costs more than this, landlords may need to take legal action to recover the difference.

Restrictions on Rent and Possession

The Act introduces several important limitations:

• Section 21 no-fault evictions will be abolished

• Landlords can still regain possession to sell the property or move in themselves, but must give four months’ notice instead of two

• Fixed-term tenancies will end, and all tenancies will automatically become periodic

• Rent cannot be increased more than once per year

• Two months’ notice is required for any rent increase, which must reflect current market levels

• No bidding wars—properties cannot be let above the advertised rent

• Only one month’s rent in advance can be taken

These changes may limit a landlord’s ability to maximise rental income.

Penalties for Non-Compliance

Landlords who fail to follow these rules may face significant financial penalties.

Can Landlords Claim Tax Relief on New Costs?

Existing tax rules decide whether landlords can deduct expenses resulting from the Act. Costs are deductible when they are revenue-based and incurred solely for running the rental business—such as:

• Fees paid to register on the landlord database

• Additional management or compliance fees

Repairs vs Improvements

Work done to meet the Decent Homes or EPC standards may be treated differently for tax purposes:

• Improvements (e.g., upgrading windows or insulation) are capital expenses and relief is given when calculating Capital Gains Tax when selling the property.

• Repairs (e.g., redecorating, fixing damage) can be deducted from rental income to reduce the tax bill.

• Domestic item replacements—for example if a cat damages a sofa—are deductible on a like-for-like basis where not covered by insurance.

Conclusion

The Renters’ Rights Act 2025 introduces major changes that increase tenant protections but also bring additional obligations and financial impacts for landlords. Understanding compliance costs and available tax relief options is essential to manage these changes effectively.

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