The New Regime

Section 21 Is Gone. What the First Weeks Tell Us.

The Renters Rights Act came into force on 1 May 2026. Section 21 — the no-fault possession mechanism used by landlords for 30 years — is abolished. Every tenancy entered on or after 1 May is now an assured tenancy. Landlords who need to regain possession must serve a Section 8 notice, prove a statutory ground, and in contested cases, go through the County Court.

The practical impact in the first weeks has been exactly what was expected. Landlords who had prepared for this months ago have adapted. Those who had not are scrambling. The biggest change is psychological: the certainty of tenure, which Section 21 provided even if rarely used, is gone. Landlords now manage their properties in a genuinely different legal environment.

What we are not seeing — yet — is a wave of supply flooding the sales market. The exodus is real but gradual. Many landlords who said they would sell have, in practice, held on, partly because the lettings market remains strong (rents are still rising in most regions) and partly because the sales market is not offering the prices they expected.

Buy-to-Let Market — Purchase Loans vs Remortgaging

New buy-to-let purchases are falling sharply. Existing landlords are remortgaging — holding what they have but not buying more. Q1 2026 data.

Source: BuyAssociation / UK Finance landlord lending data

Why Commercial Makes Sense Now

The Buy-to-Let vs Commercial Comparison Has Never Been Starker

With buy-to-let now carrying greater regulatory weight than at any point in the last 30 years, the comparative case for commercial property — particularly with a conversion angle — deserves serious consideration from any investor reassessing their strategy.

Buy-to-Let (Post May 2026)

  • Section 21 abolished — possession complex
  • Section 8 grounds required — court involved
  • 4-month notice for selling (from 2026)
  • Mortgage interest relief restriction remains
  • London yields: ~4.2% gross
  • Regulatory burden increasing every year

Commercial (FRI Lease)

  • Tenant pays insurance, rates, repairs
  • 10+ year leases — landlord-friendly County Court
  • No residential tenant protection applies
  • Mortgage interest fully deductible
  • Yields typically 5–12% gross
  • PD conversion adds 3–4x uplift potential

The commercial lease structure alone removes most of the management overhead that makes residential landlords struggle. A full repairing and insuring (FRI) lease means the tenant is responsible for keeping the building in good repair, paying their own business rates, and insuring the property. The landlord collects rent. That is a fundamentally different relationship to managing a residential tenancy.

The Renters Rights Act has not broken buy-to-let — but it has shifted the cost-benefit calculation for every landlord in the country. Commercial, with its different legal framework, is the natural next step for investors who want income property without the political risk.
May signal to watch: The volume of residential rental stock hitting the sales market over the summer. If the exodus accelerates — particularly in London — it could drive residential prices down modestly in the short term, while doing nothing to ease the underlying rental shortage. That dynamic strengthens the long-term case for conversion.
Andrew Roberts

Andrew Roberts

Andrew Roberts is a CIMA Chartered Global Management Accountant and commercial property investor specialising in permitted development conversions, with a 100% prior approval success rate. Find out more.