The Renters’ Rights Act 2025: the impact of removing “no fault” evictions on lenders and fixed charge receivers

Key change under the RRA

The main change introduced by the RRA is the removal of Section 21 “no fault” evictions.

Assured shorthold tenancies will be abolished and converted into assured periodic tenancies, meaning there will no longer be a fixed end date on which a landlord can rely.

To remove a tenant, possession will instead need to be sought on Section 8 grounds, which can be lengthy, costly and procedurally strict.

The RRA also amends the Section 8 grounds, including by increasing the rent arrears threshold from two months to three months and requiring four months’ notice where a landlord wishes to sell the property.

Impact on Fixed Charge Receivers (“FCRs”)

The changes make it considerably more difficult for a landlord to obtain vacant possession of a property. 

Landlords will have fewer routes to obtain vacant possession quickly. This is particularly relevant where a lender or receiver needs to enforce security, manage a tenanted property, or realise value through a sale.

When an FCR is appointed over a tenanted property, they will usually act as agent of the landlord. Changes affecting landlords will therefore also affect FCRs. In practice, the position may be more difficult for FCRs because they may have limited information about the property or the tenancy, and their appointment may create tension or make the tenancy more contentious.

The key issue for FCRs is the loss of the ability to rely on the end of a fixed-term tenancy as a route to vacant possession. Instead, they may need to serve a Section 8 notice and, if possession is not given voluntarily, issue possession proceedings. This is likely to extend enforcement and sale timelines, whilst interest continues to accrue on the secured debt.

There is also likely to be a cost impact. Section 8 proceedings involve strict procedural requirements and may increase legal fees, court fees and the overall cost of the receivership. The longer notice periods may also delay realisations and reduce the speed with which the receivership can be concluded.

Impact on Lenders

For lenders, the removal of “no fault” evictions may affect recovery strategy and timing. If vacant possession takes longer to obtain, outstanding debt may take longer to recover and interest may continue to accrue, alongside any enforcement costs. This may also affect borrowers, as the debt owed to the lender will continue to increase while enforcement is ongoing.

A tenanted property may also be less attractive to some buyers and may affect valuation, particularly where a quick sale is needed. In some cases, this could increase the risk of a shortfall on recovery. Lenders may therefore need to factor the reforms into loan-to-value assessments, permissions to let and enforcement planning for tenanted properties.

Key takeaway

The removal of “no fault” evictions is likely to make possession and enforcement over tenanted property slower, more expensive and more procedurally complex. Lenders should consider the potential impact when assessing loan-to-value ratios, lending against tenanted property, or consenting to lettings. FCRs should also factor the reforms into their appointment terms, costs estimates and approach to enforcement strategy.