Renters’ Rights Act Is Live: Tax Changes Hitting Landlords Harder in 2026–28
The first major phase of the Renters’ Rights Act 2025 came into force in England on 1 May 2026. Assured shorthold tenancies converted to assured periodic tenancies. Section 21 “no-fault” evictions ended. Rent increases, bidding, pets, discrimination rules and local-authority enforcement all changed on the same day. The government’s implementation roadmap and the House of Commons Library briefing set out what switched on and what still sits in later phases.
That housing reform is now sitting alongside a separate tax timetable. Making Tax Digital for Income Tax is already live for many landlords. From April 2027, rental profits for individuals will be taxed at higher, standalone property income rates. From April 2028, owners of homes valued at £2 million or more face the High Value Council Tax Surcharge. None of these tax measures is “inside” the Act itself. Together, they change the cost of holding, reporting and, in some cases, exiting residential stock.
For supported living investors and conventional buy-to-let landlords alike, the useful question is not whether the rules exist. It is how tenancy law, compliance cost and tax interact over the next two years.
The tenancy reforms described here apply in England. Scotland, Wales and Northern Ireland run different housing regimes. The new property income rates are specified for England, Wales and Northern Ireland. The High Value Council Tax Surcharge is an England-only measure.
What is now live under the Act
The implementation roadmap set the Act out in three phases. Phase 1 is the part that is already operating. Practical landlord and tenant explainers also sit in the government’s guidance for landlords and letting agents and the Guide to the Renters’ Rights Act.
From 1 May 2026 in the English private rented sector, as summarised by the Commons Library:
Fixed-term assured shorthold tenancies no longer apply. Existing ASTs became assured periodic tenancies automatically. Landlords did not need to reissue agreements, but they did need to give existing tenants the government information sheet by 31 May 2026. New tenancies need written information on key terms.
Section 21 notices can no longer be served. Possession now depends on specified Section 8 grounds, with evidence, notice periods and, if challenged, court process. Transitional rules applied where a valid notice was served before 1 May 2026 (GOV.UK possession guidance).
Rent may generally be increased only once in 12 months, using the revised Section 13 process and at least two months’ notice. Tenants can refer an increase they consider above market to the First-tier Tribunal.
Rental bidding above the advertised rent is banned. More than one month’s rent in advance cannot be required in the way many lets previously operated.
Tenants can request to keep a pet. A landlord may refuse only with a valid reason and must consider the request within a set period.
Discrimination against households with children or people who receive benefits is prohibited in the letting process.
Civil penalties and rent repayment orders were strengthened. Investigatory powers for councils began earlier, on 27 December 2025, with guidance for local authorities.
From late 2026, Phase 2 starts to land: a national private rented sector database, with mandatory landlord registration and a fee, rolled out by area. A landlord ombudsman is planned after the database, with membership expected around 2028. Phase 3 is about standards rather than tenancy form. For the private rented sector, the government has set a single minimum energy-efficiency compliance date of 1 October 2030 (EPC C equivalent, or a valid exemption), with regulations still to be made (MEES government response). A reformed Decent Homes Standard is intended to apply to private rented homes as well as social housing, with the Decent Homes consultation outcome pointing to 2035 as the latest compliance point. Neither standard should be treated as already enforceable in full. See that outcome material alongside the roadmap.
Supported living and some specialist arrangements sit in a more complex legal picture than a standard AST. The Act’s core tenancy changes target the private rented sector in England. Commissioned supported housing, exempt accommodation and social-rent arrangements can follow different routes and later phases. That is why scheme structure, nomination agreements and operator contracts still need a case-by-case reading rather than a one-line assumption that “every let is now the same.”
The tax changes running in parallel
The Act is housing law. The tax pressure through 2026 to 2028 comes mainly from Budget and Finance Act measures. HMRC’s property-rate technical note and the policy overview are the primary references.
Making Tax Digital, already in force for the first cohort.
From 6 April 2026, individuals whose qualifying income from property and self-employment combined exceeded £50,000 in 2024/25 must keep digital records and send quarterly updates using compatible software (MTD collection; how to use MTD; check if you need to use it). The first quarterly deadline for 2026/27 was 7 August 2026, with further updates due 7 November, 7 February and 7 May, plus a final declaration by 31 January. The threshold falls to £30,000 from April 2027 and to £20,000 from April 2028. Independent explainers from LITRG and the ATT MTD FAQs are useful on joint ownership and what counts as qualifying income. Properties in a limited company stay on corporation tax. Making Tax Digital for Income Tax currently mandates qualifying individuals. It is a reporting change, not a new tax rate on its own. It does raise the cost of poor record-keeping. Partnerships should be checked against the latest HMRC mandate, which has not always followed the same timetable as individual landlords.
Higher tax on rental profits from 6 April 2027.
Individual landlords in England, Wales and Northern Ireland will pay property income tax at 22% (property basic rate), 42% (property higher rate) and 47% (property additional rate). That is two percentage points above the main income tax rates. The property allowance and Rent-a-Room scheme are unchanged. Carried-forward property losses still offset property income. Relief for residential finance costs under the Section 24 restriction will be calculated at the new property basic rate of 22%. Official material estimates that by 2029/30 around 2.4 million landlords will pay more tax under this measure.
High Value Council Tax Surcharge from April 2028.
Owners, not occupiers, of residential property in England valued at £2 million or more in the 2026 valuation exercise will pay an extra annual charge on top of existing council tax: £2,500 for £2.0–2.5 million, £3,500 for £2.5–3.5 million, £5,000 for £3.5–5.0 million, and £7,500 above £5 million (HVCTS factsheet; consultation; Commons Library CBP-10869). Social housing is out of scope. The charge is aimed at a small share of the housing stock, but it is relevant to higher-value houses in multiple occupation, large supported living sites held in personal names, and any £2 million-plus home that is also let. The charging bands above are the published policy design. Detailed rules on liability, exemptions and appeals were consulted on in 2026 and still need to be put into legislation. Treat 2028 as a planning date, not as a closed code.
Earlier change that still matters.
The Furnished Holiday Lettings regime ended on 6 April 2025. Former holiday lets are now taxed as ordinary residential property, including the finance-cost restriction. HMRC’s overview of the FHL repeal is the official summary. That is not new in 2026, but it still shapes portfolios that mix short stays with longer residential or supported living use.
One Act-related tax point is easy to get wrong. Because periodic tenancies have no fixed end date, the net present value of rent could, in theory, have pushed some leases over the Stamp Duty Land Tax threshold that applies to the rent element of a lease. The government has said it intends to legislate in Finance Bill 2026–27 so that assured tenancies under the amended Housing Act 1988 do not create that SDLT charge, with retrospective effect from 1 May 2026, and that HMRC will not collect it. Until the legislation is on the statute book, treat this as a live policy commitment rather than a closed technical point. FHP Accounting sets out how this interacts with 2026 tax records and which possession costs may be deductible.
A dated round-up of the wider landlord tax calendar is in Property Tax Partners’ 2026–27 guide and UseLatch’s April 2026 tax table. Use those for orientation. Confirm every rate and date against GOV.UK and HMRC before relying on them.
Why the two agendas bite together
Taken separately, each change is manageable. Taken together, they alter cash flow, timing and exit options.
Possession is slower and more evidence-heavy. That can delay vacant possession and therefore the tax year of a capital gains disposal. Legal fees, court fees and rent-protection insurance may rise. Some of those costs can be revenue deductions where they are incurred wholly and exclusively for the continuing rental business. Capital, private or post-cessation costs may not be. Digital reporting means those costs need to be captured throughout the year, not reconstructed in January.
Rent increases are more procedural. A once-a-year statutory process, with tribunal risk, makes “pass the extra tax and compliance cost straight into rent” less automatic than it was under a fixed-term review clause. Bidding above the advertised figure is no longer a safety valve in tight markets.
Registration and redress will add recurring fees once the database and ombudsman are switched on. Those are business costs. They are also part of the compliance story local authorities will use when they inspect.
For supported living, the operational overlay is different again. Care quality, Housing Benefit or specified accommodation rules, referral relationships and operator covenants already constrain who lives in the property and on what terms. The Act’s private-rented toolkit does not replace that framework. It does raise the standard of documentation expected of anyone who is, in law, a residential landlord of an assured tenancy in England.
The opportunity side is narrower and more disciplined than a headline about “tenant rights” might suggest. Landlords who already keep properties in good condition, document grounds carefully, and run clean accounts are less exposed to penalties and rent repayment orders. Investors who hold stock in a company are not automatically inside the new individual property rates, but incorporation has its own corporation tax, extraction, lending and legal consequences. It is a modelling choice, not a default answer. Regional supply of suitable supported housing remains tight in many local authority areas. Policy risk has risen. So has the value of a scheme that can show compliance rather than promise yield.
What investors and providers should work through now
Confirm which legal regime each asset actually sits in.
A standard buy-to-let in England is in Phase 1 of the Act. A commissioned supported living scheme may not follow the same possession and rent-increase path. Mixed portfolios need a property-by-property map, not a portfolio-wide slogan. Start with the Act and the roadmap.
Rebuild the 2026/27 and 2027/28 tax model on current net rents.
Apply MTD thresholds to gross qualifying income. From April 2027, model 22/42/47% on property profits and the 22% finance-cost credit. If any unit is likely to fall into the £2 million valuation exercise, include the surcharge from 2028. Company versus personal ownership is now a larger modelling choice than it was when the rate gap was smaller.
Treat records as an operating system, not an annual chore.
MTD requires digital records of income and expenses, including jointly owned property on each person’s share. Possession costs, voids, safety certificates and, later, database fees should sit in the same record trail. First-year commentary on quarterly penalties is not a reason to delay software or bank feeds.
Plan possession and sales on the new grounds.
Selling with vacant possession, moving a family member in, or recovering a property for redevelopment now depends on statutory grounds and timing. If a disposal is planned around a tax year end or a refinancing, build in court and notice risk. Do not assume a Section 21-style timetable.
Budget for Phase 2 and standards, even though they are not all live today.
Database registration, an ombudsman levy, Decent Homes works and EPC C by 2030 are sequential costs. For older conversions and HMOs, energy and fabric spend may dwarf the two-point tax rise. That is especially relevant where supported living schemes must also meet commissioning and Building Safety expectations.
Keep marketing and client conversations inside the rules.
Yield illustrations, “guaranteed rent” language and unauthorised investment promotions remain constrained by FSMA, FCA and ASA rules. Policy change is not a product pitch. It is a reason to update due diligence, not to imply a particular structure is suitable for every investor.
The policy thread through 2026–28
Three official clocks are now running at once.
The Ministry of Housing, Communities and Local Government is switching the Act on in phases: tenancy reform in May 2026, data and redress from late 2026 into 2028, standards later (roadmap). HMRC is switching landlords onto quarterly digital reporting in income bands from 2026 through 2028 (MTD). The Treasury has legislated higher property income rates from April 2027 and a high-value council tax surcharge from April 2028 (property rates; HVCTS).
That combination is the story for this period. Security of tenure has increased for tenants in the English private rented sector. Reporting frequency and the headline rate on individual rental profits have increased for landlords. High-value owners pick up a further annual charge. Supported living investors who rely on long-term occupation, public funding and operator performance need to read all three clocks, not only the housing headline.
None of this makes residential or supported living investment unworkable. It does make informal, lightly documented, personally held portfolios more expensive and slower to adjust. The investors who will cope best are those who already treat regulation, tax reporting and property standards as part of the asset, not as an afterthought once the rent is in.
👉 Want to understand how the Renters’ Rights Act, Making Tax Digital and the 2027–28 property tax changes could affect your portfolio strategy? Connect with Shannon Hoang at SHPC to explore how we help investors and providers navigate these changes with clarity and confidence.
⚠️ Disclaimer: This article is for general information only and should not be relied upon as legal, financial, or investment advice. Property investments carry risks, and housing, tax and energy efficiency requirements remain subject to legislation, guidance and change. Please seek professional advice tailored to your circumstances.
