Most of what's been written about the Renters' Rights Act is about process: what a landlord can and can't do, and how much harder it now is to get a property back. What's had far less airtime is what the Act does to a landlord's tax return. Some of it is straightforward. Some of it quietly shifts the numbers in ways that only show up when you sit down and actually run them.
What's actually changed on the ground
The core of the reform is the end of Section 21 “no fault” possession and the fixed-term assured shorthold tenancy. Every tenancy becomes a periodic assured tenancy from day one, ended by the landlord only on one of the specified statutory grounds. Rent increases can only be pushed through once a year using the formal Section 13 process, rent bidding wars are banned, and a landlord can't ask for more than one month's rent in advance. On top of that sits a mandatory landlord ombudsman scheme, a new private rented sector database landlords have to register on, and the extension of the Decent Homes Standard and Awaab's Law style hazard-response duties into the private sector. None of that is tax law. All of it has a tax consequence.
Is the compliance spend revenue or capital?
The first question we're getting is the simplest one: can this be deducted against rental income, or does it just sit as capital cost. Split it into what it actually is, not what triggered it.
Ombudsman membership fees, PRS database registration, and any subscription-style compliance cost are recurring expenditure incurred wholly and exclusively for running the letting business. They're deductible in the year paid, exactly like letting agent fees or landlord insurance already are. There's no argument to be had there.
Remedial works carried out to meet the Decent Homes Standard are a different question, and the answer doesn't depend on the Act at all — it depends on the same repairs-versus-improvements test that's always applied. Fixing damp, repairing a failed boiler, or making good disrepair restores the property to the condition it was already meant to be in, so it's a deductible repair. Installing central heating or double glazing where none existed before takes the property beyond its original standard, so it's capital expenditure that reduces a future Capital Gains Tax bill rather than this year's rental profit. We've set out the full test, including the pre-purchase repairs trap, in our guide to repairs versus improvements. Landlords doing a batch of Decent Homes Standard work across a portfolio in one go are the ones most likely to have a genuine mix of both in the same invoice, and HMRC will expect that split to be evidenced, not estimated.
The rent-in-advance cap and the cash basis timing trap
Since April 2024, cash basis is the default way most individual landlords calculate their property profit, meaning rent is taxed when it's received, not when it falls due — we cover how that shift actually works in our guide to cash basis property income. Some landlords used to take six or even twelve months of rent upfront, which, under cash basis, pulled a large chunk of income into whichever tax year the payment landed in. Capping advance rent at one month removes that lever entirely. It's a minor point for most, but for a landlord who was deliberately timing large upfront payments around other income or allowances, it's a planning tool that's gone. It has no bearing at all on accruals-basis landlords, including every landlord operating through a company, where income is already recognised as it's earned regardless of when it's paid.
Voids, Section 24, and who actually absorbs the cost
Tighter, more specific possession grounds mean the process of regaining a property, where a landlord genuinely needs to, is likely to take longer in practice than it did under Section 21. That's a longer void between tenancies in some cases, and the tax treatment of a void is unforgiving for one specific group: individual landlords with mortgage debt. Their finance costs are relieved only as a 20% basic rate tax reducer under Section 24, not as a deduction from rental income, and that restriction doesn't pause because the property's empty. Every extra month of void is a month of full interest cost sitting outside the calculation that determines taxable profit. We go through why that restriction bites the way it does in our Section 24 guide. A company-held property doesn't have this problem in the same way, since interest is simply deducted as a normal business cost regardless of occupancy — one more factor to weigh if you're already reviewing whether your portfolio sits in the right structure.
Selling up: no special relief, same 60-day clock
Some landlords, weighing the compliance burden against a portfolio that was already marginal, are choosing to sell. It's worth being clear that there's no relief or carve-out tied to the Renters' Rights Act. A disposal prompted by the reforms is taxed exactly like any other residential property sale: Capital Gains Tax on the gain, reported and paid within 60 days of completion, with the same penalties for missing the deadline as apply to everyone else. We cover the mechanics, and the mistakes that trigger automatic penalties, in our 60-day reporting guide. If you're selling because the numbers no longer work under the new regime, get the reporting right on the way out; HMRC won't treat the sale any differently because of why you made it.
What we're actually telling clients
Budget the recurring compliance costs as an ordinary operating cost of the letting business, because that's exactly what they are for tax purposes. Get remedial works invoiced and evidenced in a way that separates repair from improvement before the work starts, not after HMRC asks. And if longer voids and an unrelieved interest cost are starting to bite, that's a genuine trigger to model whether the portfolio is still sitting in the most efficient structure — not because of the Act itself, but because it's exposed a cost that was always there.
Common questions
Are landlord ombudsman and PRS database fees tax deductible?
Yes. Mandatory membership and registration fees are recurring costs of running the letting business, so they're revenue expenditure and deductible against rental income in the year they're incurred, in the same way letting agent fees or landlord insurance premiums already are.
Is work to meet the Decent Homes Standard a repair or an improvement for tax purposes?
It depends what the work actually does, not why you're doing it. Restoring a property to its previous condition, such as fixing damp or replacing a failed boiler like-for-like, is a repair and deductible. Genuinely upgrading the property beyond its original standard, such as installing central heating where none existed, is capital expenditure and isn't deductible against rental income, though it may reduce a future Capital Gains Tax bill.
How does capping rent in advance affect a landlord's tax position?
For the great majority of individual landlords now taxed on the cash basis, rent is taxable when it's received, not when it falls due. A cap that stops a landlord taking six or twelve months upfront removes a timing tool that used to let some landlords pull a chunk of income into an earlier or later tax year. It has no effect on accruals-basis landlords, including companies, whose income is already recognised as it's earned.
Does a longer void period change how mortgage interest is relieved?
No, and that's exactly the problem. An individual landlord's mortgage interest is only ever given as a 20% basic rate tax reducer under Section 24, regardless of how long the property sits empty between tenancies. A longer void driven by tighter possession grounds means more months of unrelieved finance cost sitting outside taxable rental income, which a company structure, taxed on interest as a normal deduction, doesn't suffer in the same way.
Is there a special Capital Gains Tax relief for landlords selling up because of the Renters' Rights Act?
No. A disposal prompted by rising compliance costs or reduced flexibility is still an ordinary residential property sale for Capital Gains Tax purposes, reported and paid within 60 days of completion in the normal way. There's no carve-out or relief tied to the reason for selling.
Kieran Holsgrove is a Director and Co-Founder of Grafene Accounting, the property tax specialist firm based in Liverpool. He advises property developers, investors and landlords across Merseyside, Greater Manchester, Lancashire and Cheshire on tax structuring, developer VAT, SDLT and the long-view decisions that compound over the life of a portfolio.
This article is general information, not personal tax advice, and tax rules change. Your own position depends on facts we cannot see from here — please take advice before acting on anything above.