On 1 May 2026, the private rented sector changed permanently. The first phase of the Renters’ Rights Act came into force, ending Section 21 “no-fault” evictions in England and introducing the most sweeping overhaul of landlord-tenant law in a generation. If you own rental property, or you’re thinking about buying some, this is the moment to get clear on what has shifted and where the opportunities now sit.
What the Renters’ Rights Act Actually Changes
The headline change is the abolition of Section 21. Until now, landlords could issue a no-fault eviction notice without giving any specific reason, provided they gave the required notice period. That option is gone. Landlords can still reclaim their property, but they now need to rely on specific grounds set out in law, such as the tenant failing to pay rent, causing damage, or the landlord needing to sell or move in.
The Act also introduces stronger protections against rent increases, giving tenants the right to challenge rises they consider above market rate through a new tribunal process. Bidding wars on rental properties are now banned, and landlords must publish a fixed asking rent. For the 11 million private renters in England, these are meaningful protections. For landlords, the message is clear: professionalise or struggle.
This does not mean buy-to-let is finished. It means the rules of the game have changed, and the landlords who understand that are already well ahead.
Rental Yields Are Still Strong, Especially Outside London
Despite the regulatory shift, the underlying economics of buy-to-let remain attractive in the right locations. Rental yields hit a record high of 6.6% towards the end of 2025, and the average gross yield across UK buy-to-let properties in Q3 last year reached 7.15%. Net returns after costs typically land in the 4-5% range, which still comfortably outperforms most cash savings accounts and many bond funds.
Average UK rents for new lets are running at £1,319 per month as of March 2026, with annual growth of 1.9%. That growth rate is slowing from the sharp rises of recent years, which is actually good news for long-term landlords: a cooling market attracts less speculative money, reduces tenant turnover, and keeps the regulatory spotlight slightly dimmer. The North East is still recording annual rent inflation of 8%, while Liverpool, Newcastle and Glasgow are all seeing growth of between 3% and 4.6%. These regions continue to offer the strongest combination of yield and capital resilience.
At Aton Homes, our focus has always been on identifying regional markets where rental demand is structurally supported rather than dependent on one employer or one postcode. That discipline looks even more important heading into the second half of 2026.
The Limited Company Landlord Boom Is Reshaping the Market
One of the most significant structural shifts in the buy-to-let market has been the rapid move towards holding properties through limited companies. In 2025, 66,587 new buy-to-let limited companies were registered, an 8% increase on the year before and a 363% rise over the past decade. In January 2026 alone, 5,922 new landlord companies were set up. Around 80% of new buy-to-let purchases are now made through a limited company structure, most commonly as Special Purpose Vehicles (SPVs).
The reason is largely tax. When the Section 24 mortgage interest relief restrictions were phased in, individual landlords lost the ability to deduct mortgage interest from rental income before calculating their tax bill. Limited companies never lost that deduction. They can still offset 100% of mortgage interest as a business expense, with profits then taxed at corporation tax rates of 19-25% depending on size. For landlords with multiple properties or higher income, the numbers often favour incorporation by a significant margin.
Limited company landlords also tend to hold larger portfolios. The average individual landlord holds around 4.9 properties; the average limited company landlord holds 15.9 and is more likely to hold HMOs. According to survey data, 84% of incorporated landlords expect yields to increase within the next 12 months.
House Prices: A Buyers’ Market Is Emerging in Some Regions
On the purchase side, conditions have shifted in favour of buyers in parts of the country. UK average house prices in England sit at around £290,000, down 0.6% annually as of March 2026. London has seen the sharpest falls, with prices down 2.1% year-on-year to an average of £542,000. Knight Frank is forecasting 1.5% national price growth for 2026, followed by 3% in 2027 and 4% in 2028.
For buy-to-let investors, a flat or gently falling purchase price environment combined with strong rental yields is a good setup. The entry cost is lower, the yield calculation improves, and there is capital growth potential baked in once the market recovers its usual momentum. Northern Ireland, Wales and Scotland are all still recording faster price growth than England, which matters for investors with a UK-wide view.
Rental demand has cooled, running 14% below last year’s levels as supply improves and first-time buyer activity picks up in some areas. A less frantic rental market is not a bad thing for a landlord focused on quality, long-term tenancies rather than maximising short-term rents.
How to Position a Portfolio for the New Regulatory Environment
The landlords who will thrive under the Renters’ Rights Act are those who treat their properties as a proper business rather than a side arrangement. That means ensuring properties meet the upcoming Decent Homes Standard requirements, keeping records in order, using proper tenancy agreements, and being responsive when issues arise. It also means being selective about where you invest, focusing on locations with diverse employment bases and sustained rental demand.
The Act does introduce a more demanding compliance environment, but it also changes the competitive landscape. Accidental landlords who have been operating informally for years will find the new obligations harder to meet, and some will exit the market. That exit creates opportunity for professional landlords to acquire well-located stock and fill it with well-qualified tenants.
There is also a growing case for properties that attract longer-term tenants by design: well-maintained homes in family-friendly areas, near good transport links, with outdoor space. Tenants who stay for three or four years rather than one are good for everyone. That alignment between tenant satisfaction and landlord stability is exactly what the new rules are designed to encourage.
The second half of 2026 will bring further clarity on how the new eviction grounds are interpreted by courts and whether any technical amendments follow from early practical issues. The broader picture suggests a market that rewards careful selection over speculative buying. Investors who go in well-informed, with the right structure and the right locations, are likely to look back on this period as a good time to have been active.
At Aton Homes, we spend a lot of time thinking through exactly these questions for the investors we work with. If you want to talk through how the Renters’ Rights Act affects a specific portfolio, or you are exploring buy-to-let for the first time, we are always happy to have that conversation. Get in touch and let’s talk through the options.
