The Renters Rights Act 2025 (RRA) comes into force on 1 May 2026 and introduces significant changes to the private rented sector and the landlord–tenant relationship. The focus of this article is the impact on the retirement living sector for operators, investors and funders.
The most important point to note is the RRA does not contain an exemption for retirement living, which means it's treated in the same way as the private rental sector if a unit is let under an assured tenancy. Arguably the RRA does not reflect the specialist characteristics and service led nature of the sector which can also involve an element of care provision.
The abolition of fixed-term tenancies means occupation will be open-ended: residents could decide to stay for life, but they could also leave with two months’ notice.
Operators can only terminate and recover possession of a unit on specific statutory grounds. While for residents it creates flexibility and certainty for operators, investors and funders it creates uncertainty and an element of lack of control. This could be a particular challenge where a residents care needs change in a non supported living setting and it's in their best interest to move to alternative suitable accommodation.
Operators were already cautious about triggering no fault evictions - due to disability being a protected characteristic under the Equality Act 2010 and declining health was never a valid justification. However, this route is now completely closed so operators will have to rely on the following:
Unfortunately these grounds will not be easy to rely on and the proof thresholds high.
Operators will only be able to increase rents once per year and will require two months notice to be given using a specific process. Any contractual rent increase or review clauses will be invalid. Worryingly for operators, residents will be able to challenge the increase but must do so at the First Tier Tribunal. Rent increases will not come into force until the challenge has been decided.
This raises the risk of income uncertainty for operators, investors and funders and it will be important to be able to robustly justify rent levels in case of challenge. Operators also need to consider whether their rent, service charge and optional extra care fees are transparent and properly priced.
Due to the uncertainty around income, there is some concern about the impact on exit values and funding assumptions and appetite for pure rental retirement living models may take a hit. This may result in more operators adopting long leases or licences, with a separate care and support agreement, as a way to both protect value but also retain flexibility.
On the other hand the chances might have an unexpected outcome as it brings more flexibility for residents and more protection from eviction. Therefore, we may find demand increases and take up is higher over the next few years so operators will have to balance increased demand against less long term certainty on tenure and rent levels.
It's highly likely that operators will seek to move to different tenancy models and review how housing and care provision interact. Ultimately there may have to be further changes to the RRA to recognise the specialist needs of the retirement living sector as a step along the care pathway distinct from the generic private living sector.
For further information please contact our real estate team.
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