With just six months until the Renters’ Rights Act 2025 comes into force, a lot of HMO landlords are looking at their portfolios and wondering the same thing: “What do I need to get sorted now so I’m not firefighting come May next year?”
And that’s the right question to ask. The Act isn’t just another update or tweak – the legislation brings with it the biggest changes we’ve seen in rental law in over three decades. It will change how properties are let and managed, and place greater emphasis on understanding tenants to create long-term stability for everyone involved.
For those managing HMOs, this becomes even more important, with a stronger focus needed on how well tenants will live together, rather than solely on finances and future plans.
Landlords who prepare early will be in a much stronger position when the new system arrives. So, what do the changes look like?
Most of the headlines have focused on Section 21 disappearing, making it harder to evict tenants but there are other important changes coming down the track that we all need to be mindful of.
Fix-term contracts are becoming a thing of the past, with contracts moving to rolling tenancies from 1 May making them more flexible from day one, and existing contracts will automatically switch over regardless of how long is left on the terms. On top of this, tenants can leave with just two months’ notice, which in effect could be given on day one.
In joint tenancies, one person’s decision can now end the tenancy for everyone. Importantly, this will also apply in instances where others named in the agreement have no prior knowledge of this choice or even agree with it.
Further changes include ‘rents in advance’ being outlawed. This means only a maximum of one month’s rent can be taken, and occupation must be given if an agreement is signed and the tenant fails to pay the first month’s rent. Another change will see rent increases limited to once a year.
Those managing properties will also need to navigate tighter local authority powers, stricter standards under the Decent Homes Standard, and potential new penalties for failing to register or provide accurate information to a new national landlord register, known as the Private Rented Sector (PRS) database. On top of this will be the introduction of a new Private Landlords Ombudsman, bringing with it further mandatory registrations and annual costs, although details on this are still to be confirmed.
These are not just mild reforms; they are major. For some, they may be the final nail in the coffin - particularly accidental or tired operators – who may exit the HMO market altogether. For those staying in the game, though, increased demand for well-managed homes could create more opportunities.
So, what should be top of the list for HMO landlords and property managers?
1. Compatibility will be king – With tighter eviction rules and more rights for tenants, landlords will need a far clearer picture of who is living in their properties. Referencing can no longer focus solely on income and credit checks; in HMOs, especially, household dynamics and tenant matching will carry far more weight. Compatibility will no longer be a ‘soft’ idea – it’ll be a practical tool for keeping households stable, especially important under the new “One out all out” rule that if one leaves, the whole tenancy ends for everyone. Well-matched tenants are more likely to stay settled, while poorly matched groups risk creating conflict, admin burdens, and ultimately a higher turnover for landlords.
2. Get your processes ready - From May 2026, certain processes that worked before simply won’t cut it anymore - mistakes, missed dates, or compliance gaps could quickly become costly, especially with fines as one of the possible outcomes.
Some of these key changes landlords need to prepare for include the launch of the new Private Rented Sector database - a new central online database for landlords to register properties, ensuring compliance and better oversight. This is expected to roll out region by region throughout 2026. Failure to register and to provide accurate details could result in fines, starting from £7,000. Under a new ombudsman new annual charges per property are expected to come into effect as well, anticipated to be in the region of £10 to £30 per property.
Furthermore, when the Act comes into force new contracts do not have to be issued. Instead, each tenant must be given a government issued written statement by 31 May 2026 which summarises the new law and their rights. The government will publish this in March. Failure to do this with in the first month may lead to a fine.
3. Review your contracts – While existing contracts will not need to be rewritten, tenancy agreements going forward will need a complete overhaul.
Not just making sure they align with the new legislation, but to protect you and your properties. But what needs to be in the fine print?
- As a result of the new “one out, all out” rule, joint tenancies are likely to become more complicated and higher maintenance. Once notice is served by one tenant, a new tenancy agreement will have to be drawn up for those who want to remain. Notices can’t be unilaterally revoked; the only way to cancel them will be by mutual agreement. To protect you in cases where you have overstayers, it’s important to include in your acknowledgement your right to charge them double rent under section 18 of the Distress for Rent Act.
- Given this potential admin headache, it could be worth considering room-only tenancies. These give landlords and managers the flexibility and will avoid disruption to the rest of the household. They will also help with rent cycles, deposits, compliance timelines, referencing, and inspection schedules - basically, it touches every part of managing the property.
- Be aware that rent increases must follow Section 13, meaning landlords can only issue one increase per year, which must align with local market conditions. Tenants will have stronger rights to challenge excessive proposed hikes, and can even challenge the agreed rent within the first six months after moving in.
The landlords who treat the next six months as a runway - not a countdown - will navigate the transition far more smoothly. Yes, the Renters’ Rights Act brings more administration, tighter rules, and higher penalties.
But it also creates real opportunities, including clearer expectations, stronger household stability when managed well, increased demand for well-run HMOs, and space for landlords who are ready to step up as others step back.
It’s not about doing more; it’s about doing the right things at the right time. And the best time to start is now.
