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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