Six ways the Renters Rights Act will change renting: Part 5, Rent Issues

The Renters Rights Act 2025 introduces significant changes to how rent is managed and regulated in the private rental sector. These reforms aim to address long-standing issues around rent increases, rental bidding, and upfront costs, with the government seeking to make renting more affordable and fairer for tenants.

Concerns over rent levels

For many years, tenants have faced challenges in contesting rent increases, often deterred by the threat of eviction notices. This has contributed to rents rising faster than inflation in numerous areas. The UK now has some of the highest housing costs compared to similar countries, with housing expenses consuming a larger proportion of household income than in almost any other OECD nation except Finland.

The Renters Rights Act 2025 is designed to tackle these issues and bring more transparency and fairness to rent setting and increases.

Ending rental bidding

One notable problem has been ‘rental bidding’, where tenants offer increasingly higher rents to secure properties, driven by shortages of suitable accommodation in high-demand areas. The Act seeks to eliminate this practice by requiring all property advertisements to state a ‘proposed rent’ that landlords cannot exceed.

Local authorities will have the power to fine landlords who fail to specify a proposed rent or who allow tenants to bid above the stated amount. This measure aims to curb excessive rent inflation caused by competitive bidding.

Restrictions on rent in advance

Another barrier for tenants has been the demand for large sums of rent paid upfront, especially for those with poor credit histories. The new legislation prohibits landlords from accepting any rent in advance before the tenancy agreement is signed. Breaching this rule can result in fines of up to £5,000 per offence, enforceable by Trading Standards.

This change is intended to reduce the initial financial burden on tenants and make renting more accessible.

Changes to rent increases

Prior to 1 May 2026, landlords could increase rent through tenant agreement, rent review clauses in tenancy agreements, or by serving a statutory notice under section 13 of the Housing Act 1988. The Act now restricts rent increases solely to the statutory notice procedure.

While landlords and tenants may still agree on rent levels, any new rent can only take effect after a section 13 notice (form 4A) has been served. Rent review clauses in tenancy agreements are no longer enforceable.

Tenant challenges to rent rises

The statutory notice procedure allows tenants to challenge proposed rent increases at the First Tier Tribunal if they believe the rent exceeds the ‘market rent’. The Tribunal can only reduce the rent, not increase it, and will set the new rent from the date of its decision or up to two months later if immediate implementation would cause serious hardship.

This process may delay rent increases and is a source of frustration for many landlords. With Tribunals already overstretched, increased challenges could lead to lengthy delays. The government has reserved the right to intervene if these delays become problematic.

What this means for landlords

The new rules will ease some pressures on tenants, who previously faced demands for deposits up to five times the weekly rent plus several months’ rent in advance. However, landlords may become more selective, particularly regarding tenants with poor credit records, potentially making it harder for these individuals to secure accommodation.

While the government hopes these measures will slow rent inflation and improve affordability, rent levels will still be influenced by market supply and demand. With a shortage of quality properties in many areas, rents are likely to remain high until additional social and affordable housing is provided.

Landlords are encouraged to consider regular, modest rent increases, which are generally more manageable for tenants and less likely to provoke disputes.

Source: Based on reporting from The Landlord Law Blog

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