The Government has announced new legislation to prevent private residential tenants from being swept into the scope of Stamp Duty Land Tax (SDLT) on rent as an unintended consequence of the Renters’ Rights Act 2025 (RRA 2025), which comes into force on 1 May 2026.
The change sits against a dramatic statutory overhaul that substantially strengthens tenant security and increases compliance obligations for landlords.
RRA 2025 – Recap on Legal Reforms
The Renters’ Rights Act 2025 comes into force on 1 May 2026 and fundamentally reshapes the residential lettings landscape.
Assured shorthold tenancies (ASTs) fall away, all tenancies become assured periodic tenancies (APTs), and fixed terms and contractual break rights become void. The tenancy instead aligns with the rent period (typically monthly), with tenants able to terminate on not less than two months’ notice.
Section 21 “no fault” evictions are abolished. Landlords will only be able to recover possession by relying on statutory grounds, subject to a limited transitional window for notices served before 1 May 2026.
Possession claims will therefore depend on statutory grounds, including occupation by the landlord or family, sale, redevelopment, and rent arrears (now increased to three months). Many grounds have higher thresholds and longer notice periods, with greater reliance on evidence.
Rent reviews are also fundamentally altered. Contractual rent review clauses are no longer effective. Increases must proceed under section 13 Housing Act 1988 with at least two months’ notice and no more than once per year. Tenants may challenge increases in the First-tier Tribunal, which operates on a no-costs basis, and increases cannot be backdated. So tenants will have a strong motivation to refer a rent review to the Tribunal for determination.
Compliance remains critical. Deposits must be properly protected and prescribed information served. Failure to do so will prevent a possession order unless the deposit is first returned.
The Act also introduces a mandatory national landlord database (expected later in 2026), requiring registration of landlords and properties. Non-compliance may result in financial penalties, criminal exposure, inability to recover possession, and rent repayment orders.
Landlords should act now: review existing tenancies, consider whether to serve notices before 1 May 2026, ensure compliance, and prepare updated documentation. Required tenant information must be issued by 31 May 2026.
SDLT: the problem and the fix
Current SDLT rules trigger tax charges on the rent element of a lease once the net present value of future rent over the tenancy term exceeds £125,000.
Under the existing AST model, the fixed term is usually short. As a result, private renters rarely meet the SDLT threshold as the aggregate rent over the tenancy’s lifetime seldom racks up to over £125,000.
However, the RRA 2025 abolishes fixed terms and converts ASTs into APTs which, for valuation purposes, will be treated as continuing indefinitely.
On the face of it, this reform would likely push some tenancies over the SDLT threshold as the aggregate rent would now exceed £125,000. Although any SDLT charge would likely be small, the surprise annual filing obligations would be onerous.
In response to this unintended practical consequence, the Government proposes to include retrospective provision in the Finance Bill 2026–27 to prevent this from happening: no SDLT charge will arise on the rent for assured residential tenancies under the RRA 2025.
HMRC will not collect SDLT on the rent element of an assured tenancy from 1 May 2026 until the Finance Bill measure takes effect.
Final Thoughts
The Government’s SDLT announcement is a necessary correction to what would otherwise have been an unintended tax consequence.
It does not, however, alter the fundamental policy outcome of the RRA 2025: a structural shift in favour of tenant security and a more regulated, compliance-driven lettings market.
The key message is straightforward: the regime changes on 1 May 2026 whether landlords are ready or not. Preparation now will avoid cost, delay and uncertainty later.