Renters’ Rights Act breaching Buy to Let mortgage terms and conditions?

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Renters’ Rights Act breaching Buy to Let mortgage terms and conditions?

Hi Everyone, With the Renters’ Rights Act stating that all tenancies are to be periodic from May 2026, how will that affect Buy to Let mortgages that have terms that condition the tenancy must be an AST?

Are we being forced by the Act to breach mortgage Terms and Conditions?

Is there a provision in the act for this anomaly?

Kevin

Editor’s Note:

What the Renters’ Rights Act Does

The RRA abolishes fixed-term ASTs and replaces them with a single assured periodic tenancy (APT) for residential lets from 1 May 2026 (the commencement date). This means:

All current fixed-term ASTs will automatically convert to periodic tenancies on that date.

After commencement, landlords cannot grant new fixed-term ASTs, and every tenancy will be rolling (e.g., monthly).

Tenants can end tenancies by giving statutory notice (e.g., 2 months).

This is a statutory change to housing law, and it replaces the AST regime under the Housing Act 1988 with a different form of assured periodic tenancy.

Mortgage Terms Requiring ASTs

Many buy-to-let mortgage contracts currently include wording like:

“The property must be let on an Assured Shorthold Tenancy (AST) in line with the Housing Act 1988.” Lenders Handbook

This is because lenders traditionally saw fixed-term ASTs as giving a predictable income stream and clear possession rights.

With the AST regime abolished by statute, landlords won’t be able to comply with those specific contractual terms anymore because, quite simply, ASTs will no longer exist.

Does the RRA Force You to Breach Your Mortgage Terms?

No, not technically.

Statutory Override

The RRA changes housing law, and statutory law generally overrides private contracts where there is a conflict (e.g., you can’t give a fixed-term AST if the law forbids it).

A lender’s requirement for an AST becomes impossible to fulfil, not something you are choosing to breach.

Lenders Will Need to Update Mortgage Conditions

Lenders, especially mortgage underwriters and their legal team, will have to revise their acceptable tenancy definitions to reflect the new assured periodic tenancy regime, because the old AST form will no longer be lawful.

Industry guidance (e.g., mortgage handbook acceptability criteria) is already tied to ASTs, but these frameworks will need to be updated as the law changes. Lenders Handbook

Practical Position

Post-Commencement, your tenancy will be what the statute says it is: an assured periodic tenancy. You will not be in breach of housing law by offering this; it’s the only lawful form.

If there is a conflict with a mortgage condition that hasn’t been updated, you would raise it with your lender.

What Lenders Are Likely to Do

While we don’t yet have a unified published set of post-RRA mortgage criteria from lenders, industry commentary suggests:

Lenders will adjust product terms

Mortgage lenders will update wording so that assured periodic tenancies are acceptable instead of ASTs.

Underwriting criteria may emphasise tenancy stability, rental income security, and possession rights under the new Section 8 regime rather than fixed-term ASTs.

Possible shift in risk assessment

Some lenders might adopt stricter serviceability tests, higher rental coverage requirements, and more cautious criteria (e.g., higher deposits or LTV limits) due to perceived volatility with periodic tenancies. Kerr & Watson

No automatic breach

Simply having periodic tenancies because the law changed will not, on its own, put you in breach of your mortgage. If a lender tries to enforce an AST requirement after 1 May 2026, that mortgage condition will likely be unenforceable to the extent it requires something illegal/illegal to grant.

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Illegal Activity by Tenants – Are You Covered?

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Illegal Activity by Tenants – Are You Covered?

One of the worst-case scenarios for landlords is discovering that tenants have used a rental property for illegal activity. Cannabis farms, unlicensed HMOs, or even organised crime can leave behind major damage, loss of income, and potential legal consequences. The immediate question for most landlords is: does my insurance cover this? The answer depends on the wording of your policy, your disclosure at inception, and whether you met inspection requirements.

Common Types of Illegal Activity in Rental Properties

• Cannabis farms – tampered electrics, water damage, mould, and structural weakening from extraction systems.
• Subletting and unlicensed HMOs – breaching licence conditions, fire safety rules, and creating liability exposures.
• Fraudulent use – tenants using the address for identity fraud or illegal businesses.
• Anti-social behaviour – drug dealing, disorder, or activities that create reputational risk for the landlord.

How Insurers Typically Respond

Most landlord insurance policies exclude damage or liability arising from illegal activity. However, some specialist insurers will cover malicious damage caused by tenants engaged in illegal use, provided you can show you took reasonable precautions and complied with inspection conditions. The outcome often hinges on evidence.

Inspection Requirements

To reduce risk, many insurers insist on regular documented inspections. For example:

• Inspections every 3 months (some require every 6–12 weeks).
• Written logs and, ideally, date-stamped photos.
• Prompt reporting of any concerns to insurers or authorities.

Failure to inspect may give insurers grounds to decline a claim, arguing that the landlord did not meet policy conditions.

What About Malicious Damage?

If illegal activity results in deliberate destruction, some policies will pay under malicious damage by tenants – but only if this extension is included. Even then, insurers may refuse claims if they believe the landlord failed to exercise proper tenant checks or inspections.

Loss of Rent – Grey Areas

Loss of rent cover usually applies after an insured peril such as fire or flood. It rarely applies when tenants are evicted due to illegal use. Some specialist policies extend to loss of rent following police closure or malicious damage, but this is not standard. Landlords should not assume rent will continue if a property becomes uninhabitable after illegal activity is discovered.

Practical Steps to Protect Yourself

• Carry out robust referencing and check ID thoroughly.
• Conduct regular inspections and keep records.
• Look out for red flags – covered windows, unusual condensation, tampered electrics, or complaints from neighbours.
• Ensure your policy explicitly includes malicious damage by tenants if you want protection.
• Notify your insurer if the property changes use (for example, becoming an HMO) to avoid non-disclosure issues.

Case Example

A landlord discovered their tenants had converted a three-bedroom semi into a cannabis farm. The electrics had been bypassed, causing fire risk, and the property was saturated with condensation and mould. The insurer initially declined the claim under the “illegal activity” exclusion. However, because the landlord provided quarterly inspection records showing no signs of the operation until the final month, the insurer paid for malicious damage repairs (but not lost rent). This highlights the importance of evidence and compliance.

Final Thoughts

Illegal activity in rental properties is a nightmare scenario, but landlords can protect themselves by choosing the right policy and maintaining strong inspection and referencing records. Do not assume standard landlord insurance will cover malicious damage or loss of rent after illegal activity – check your wording and speak to a broker who understands landlord risks.

Request your quote or call-back

The most efficient way to get a personal quote with the best price and cover possible is to call the team on 01832 770965 so we can focus on your enquiry when you are ready and sitting down with your portfolio details to hand.

Alternatively, you can use the form below to request one of our team to give you a call back.

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Publication date: Tuesday 23 December 2025

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Fewer renters moving as section 21 notices decrease – Generation Rent

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Fewer renters moving as section 21 notices decrease – Generation Rent

A new Generation Rent survey reveals a decline in Section 21 notices and a drop in rent increases.

In a poll of 711 renters about the upcoming Renters’ Rights Act, despite a drop in Section 21 notices, the number of Section 8 notices has risen.

The survey comes ahead of the implementation of the Renters’ Rights Act on 1 May 2026.

Decline in Section 21 notices

According to the survey, the proportion of people having to move has fallen since 2024, which Generation Rent say is a result of a decline in Section 21 notices.

In the survey, the tenant group claim former Chancellor Jeremy Hunt’s decision to cut the higher rate of capital gains tax from 28% to 24% in the Spring Budget 2024 “led to the receding of a spike in evictions following the tax cut for landlords, meaning fewer have been selling up this year. It may also be due to fewer landlords evicting to raise the rent, because rents on new tenancies haven’t been rising as quickly this year.”

In this year’s Autumn Budget, Chancellor Rachel Reeves raised tax rates on dividends, property, and savings income by 2 percentage points.

Elsewhere, the survey reveals that the proportion of renters being served a Section 8 eviction notice has increased.

The tenant group claim this could be due to rising rent arrears caused by the Local Housing Allowance (LHA) being frozen.

Generation Rent predict that, with the upcoming Renters’ Rights Act, eviction trends will change, with the number of eviction notices expected to fall once Section 21 is abolished.

The survey says: “We should see a further fall in these numbers after May 2026, and Section 8 should become the only game in town for landlords who want to evict tenants.

“Along with Section 21 going, there will be no fixed terms, so no moment of anxiety that might prompt renters to move out if they can’t commit for another year, and landlords will not be able to ask a tenant to leave without a formal Section 8 notice, so these reports should decline as well.”

Rising market rent most common reason for rent increases

The survey also reveals the proportion of renters who had not moved in the past year and were asked to pay higher rent has not increased.

Despite nearly two-thirds (63%) of renters reported being asked for a rent increase. The size of rent increases appears to be falling, with 15% of respondents saying they were charged at least £100 more per month in the 12 months up to September 2025, compared to 22% in October 2024.

The most common reason given by landlords for a rent increase was rising market rents a further 4% attributed rent hikes to advice from letting agents. Generation Rent claim mortgage payments “have never been the main reason for rent increases”, despite evidence that more landlords are struggling to pay their mortgages than ever before.

Despite the Generation Rent survey finding that 27% of private renters did not feel confident asking their landlord to fix something that is the landlord’s responsibility, this means that 73% did feel confident.

A government survey also reveals that the majority of private renters have had a positive experience in the private rented sector, with satisfaction higher for landlords (70%) than for property management agencies (62%).

The full Generation Rent can be viewed by clicking here.

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