Section 21 is being abolished, Section 8 is coming

One of the most significant changes in the new law is the abolition of Section 21 and its replacement with Section 8. This regulation ends landlords’ right to evict tenants without giving any reason.

Under Section 8, the grounds for evicting a tenant are as follows:

* The landlord moving in

* The property being put up for sale

* Rent arrears

* Other breaches of the tenancy agreement

* Damage to the property

* Providing false information

* Criminal or anti-social behaviour

As the vast majority of our investors purchasing property in the UK do so for rental income, I do not believe this change will significantly affect buy-to-let investors. Furthermore, the new law allows for the eviction of a tenant if a family member (yourself or your child) intends to live in the property. Therefore, I believe this change will not pose a major problem for our investors.

Tenancy Contract Term is Being Removed

Another significant change is the removal of the tenancy contract term. Tenants will now be able to vacate the property at any time by giving two months’ notice. In other words, there will be no term in tenancy contracts. I believe this is the most important clause that will affect our investors. It is crucial that this clause is thoroughly understood and taken into consideration when making new investment decisions.

How should we interpret this?

I believe there will be high tenant turnover in central areas favoured by students and expats. We experienced this during the COVID period; students and expats were the first to leave the country, and central properties remained vacant for months. Therefore, if you are considering a new investment, you should choose areas where families and/or professionals live, with green spaces or good schools. Considering that families and professionals prefer these areas, I do not think there will be a high tenant turnover. Consequently, if the location is chosen correctly, an indefinite tenancy agreement will not greatly affect investors.

Renting a property in the UK is both a hassle and an expensive business. For this reason, families and professionals do not prefer to change homes frequently unless absolutely necessary.

Rent Increase and Advertised Price

The change regarding rent increases is not negative either:

* Increases will be made once a year and according to market conditions.

Currently, when rents are increased at a rate significantly higher than the market, tenants immediately find another property and vacate the premises. Landlords, on the other hand, struggle to let their properties because the rent they desire is above market rates. Therefore, landlords already make rent increase decisions based on the market. Consequently, I do not believe this provision will have any effect. Under the new law, you can no longer increase the rent amount stated in your property listing. Under the current system, you could receive offers above the amount stated in the listing and sign the contract accordingly. Now, you will have to rent and sign the contract based on the amount in the listing. I do not think this will have a negative impact on landlords either. However, I anticipate that rents will increase slightly as a result.

The Prepayment Period is Ending

Another important change is that it is now prohibited to take rent in advance. Newly arrived expats and students in the country used to pay their rent 6 months or 1 year in advance because they did not have a sufficient credit rating. This method will no longer be available as of 1 May 2026. Those with low credit scores will be required to find a guarantor. If they cannot find a guarantor, they will be able to pay a fee to companies that professionally provide this service to act as guarantors. In both cases, rent will be paid monthly. The era of paying rent annually, quarterly, or six months in advance is coming to an end.

Pet Regulations

A change has also been made regarding pets. Landlords can no longer say ‘I don’t want pets’. There are a few exceptions, but they are very limited:

* If the property is small and the animal is very large

* If there is another official tenant in the property and their allergy is medically proven

Energy Performance (EPC) Regulations

One of the most significant changes in the law is the restriction on the energy level of the property. Currently, the EPC (Energy Performance Certificate) must be at least E. The best is A, the worst is G. After the new law, the EPC can be as low as C.

How should we interpret this?

Before purchasing a Victorian-style old house, old building, or old flat, you must check its Energy Performance Certificate (EPC) and be certain. The insulation in all old buildings is truly very poor. Therefore, if you purchase such a property, you must improve the insulation and raise the EPC rating to C. You need to carefully consider how much additional cost this will incur.
My advice is that, due to these unforeseen expenses, it is much safer to buy flats in new buildings/developments.

I hope you found this information useful. For any further questions, please contact the Unique London team.