Background: Changes to Tenancy Agreements Under the Renters’ Rights Act

The Renters’ Rights Act introduces a significant change to tenancy agreements in the UK private rented sector by abolishing fixed-term assured shorthold tenancies. These will be replaced with periodic assured tenancies, which do not have a fixed end date. This legislative shift aims to provide tenants with more security but also brings new tax considerations for both landlords and tenants.

Stamp Duty Land Tax and Its Application to Leases

Stamp Duty Land Tax (SDLT) currently applies to leases with a net present value exceeding £125,000. Typically, short leases have not been subject to SDLT because the total rent payable over the lease term does not reach this threshold. However, with the removal of fixed end dates, periodic tenancies could accumulate rent over time that surpasses the SDLT threshold, potentially triggering a tax liability.

A briefing from KPMG highlights this emerging issue, noting that tenants in high-rent areas such as Westminster, where annual rents might be around £48,000, could face SDLT liabilities after approximately three years. For tenants paying lower rents, for example around £20,000 per annum, the SDLT liability might arise after seven or eight years if the situation remains unchanged.

Implications for Tenants and Landlords

While the initial SDLT charge may be relatively low, the penalties for failing to file SDLT returns can be substantial. This raises concerns about tenant awareness and compliance, especially for long-term tenants who may not anticipate such tax obligations arising many years into their tenancy.

Landlords should consider how to communicate these potential liabilities to tenants, although it remains uncertain whether tenants will remember or act on this information over a decade-long period. The evolving nature of tenancy agreements and tax legislation means landlords and agents must stay informed to advise tenants appropriately.

What This Means for UK Landlords and Letting Agents

Landlords and letting agents should be aware that the shift to periodic tenancies could indirectly affect tenant affordability and compliance. While the SDLT burden falls on tenants, landlords may face challenges if tenants are deterred by unexpected tax bills or penalties.

It is advisable for landlords to monitor developments in this area and consider including clear guidance on SDLT responsibilities in tenancy agreements or tenant communications. Staying informed through professional updates and tax briefings, such as those from KPMG, will help landlords manage risks associated with these legislative changes.

Further Reading and Resources

For more detailed analysis, the KPMG briefing on this topic can be found here: https://kpmg.com/uk/en/insights/tax/tmd-new-sdlt-burden-for-private-renters.html

Additionally, Property118 has covered the issue extensively, including concerns about tenants receiving SDLT bills under periodic tenancies.

Suggested internal link anchors

• Renters’ Rights Act
• periodic assured tenancies
• Stamp Duty Land Tax (SDLT)
• SDLT penalties
• tenant tax liabilities
• private rented sector
• long-term tenancy agreements
• tenant affordability
• letting agents’ responsibilities
• tax compliance for tenants
• KPMG SDLT briefing
• Property118 tenancy updates

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/