Surviving the Renters' Rights Act 2026: Financial & Accounting Impacts

The Renters' Rights Act 2024, which received Royal Assent in late 2024, comes fully into force in May 2026 after a 12-month transition. It is the largest reform of the private rented sector in over 30 years. For Harrow landlords the key changes are: abolition of Section 21 no-fault evictions, conversion of all assured shorthold tenancies into periodic tenancies, extension of the Decent Homes Standard from social housing to the private rented sector, and the introduction of Awaab's Law mandating rapid response to damp and mould hazards.

The accounting and financial impact runs to several thousand pounds per property in 2026 alone, plus a permanent uplift in operating costs of 8-15% for most landlords. This guide covers the practical budgeting and tax-treatment implications.

The May 2026 abolition of Section 21

Section 21 of the Housing Act 1988 (the no-fault eviction route) is abolished from May 2026. The replacement is a strengthened Section 8 regime with:

• Mandatory grounds for serious arrears (8+ weeks unpaid), anti-social behaviour, and landlord owner-occupation or sale.
• Discretionary grounds for moderate breaches.
• A new ombudsman scheme covering all private landlords.
• A single property portal where every rented property must be registered.
• Notice periods of 4 weeks to 4 months depending on ground.

Periodic tenancies: cash flow implications

All assured shorthold tenancies convert to periodic tenancies in May 2026. The cash-flow impact:

1. 1Tenants can give 2 months' notice to leave at any time.
2. 2Landlords lose the certainty of fixed-term renewals (the 12-month "AST renewal" cycle is gone).
3. 3Average tenancy duration is expected to fall from 18-24 months to 14-18 months in central London markets, broadly flat in commuter belt.
4. 4Re-letting frequency rises 15-25%, increasing void and tenant-find fee costs.
5. 5For a typical Harrow portfolio with 4 properties, additional tenant-find fees run £800-£1,400 per year.

The Decent Homes Standard extension

The Decent Homes Standard previously applied only to social housing. From May 2026 it extends to the private rented sector, with four core requirements:

• No Category 1 hazards under the Housing Health and Safety Rating System (HHSRS).
• In a reasonable state of repair (not "as new", but no significant disrepair).
• Reasonably modern facilities: kitchen under 20 years old, bathroom under 30 years old.
• Reasonable thermal comfort: efficient heating, effective insulation.

For Harrow landlords with older stock, the upgrade cost varies sharply by property age:

Awaab's Law: damp and mould response

Awaab's Law (introduced after the 2020 death of two-year-old Awaab Ishak from mould exposure) requires rapid landlord response to damp, mould and other prescribed hazards:

1. 1Landlord must investigate hazards within 14 days of tenant report.
2. 2Investigation findings shared with tenant within 48 hours of completion.
3. 3Repairs must commence within 7 days of investigation findings.
4. 4Emergency repairs required within 24 hours.
5. 5Failure attracts unlimited damages and reputational risk through the new ombudsman scheme.

Section 8 evictions: rent arrears and legal expenses

Section 8 possession proceedings cost more than the old Section 21 route:

• Court fee: £355 (rising 2026).
• Solicitor fees for contested possession: £1,500-£3,500.
• Bailiff fees if enforcement required: £121-£250.
• Lost rent during the proceeding: 8-22 weeks at full rent.
• All of these are deductible against rental profit as legal and bad-debt expenses.

For high-volume landlords, the total Section 8 cost per contested case is £4,500-£8,000 plus lost rent. Rent guarantee insurance becomes a stronger value proposition (£200-£400 per year per property covers up to 6 months of rent).

Rental deposits and advance payments

The Renters' Rights Act tightens deposit handling:

• Deposits remain capped at 5 weeks' rent (under £50k annual rent) or 6 weeks (above).
• Advance rent payments capped at 1 month maximum.
• Deposit protection scheme registration must complete within 14 days (down from 30).
• Failure to register attracts statutory penalty of 1-3 times the deposit value.

Pet-friendly tenancies: insurance and deposits

The Act introduces a presumption in favour of pet-keeping, with limited grounds for refusal:

• Tenant must request in writing.
• Landlord must respond within 28 days.
• Refusal must be on reasonable grounds (block freeholder restrictions, allergy concerns, property type unsuitable).
• Landlord may require pet damage insurance, paid by tenant, but cannot demand pet-specific deposits.
• Pet-friendly landlord buildings insurance typically attracts a 5-12% premium increase.