The Renters Rights Act 2025: Everything You Need to Know

What the Renters Rights Act 2025 Means for Leasehold Flat Owners Who Let Out Their Property

The Renters Rights Act 2025 is bringing major changes to residential tenancies in England & Wales.

One of the biggest changes is to assured shorthold tenancies, often known as ASTs, which are being abolished. For many years, ASTs have been the standard form of private residential tenancy. Most landlords of flats will have granted ASTs when letting out their property.

ASTs are now being replaced by a new system of assured tenancies. In most cases, these will be periodic tenancies. This means they do not have a fixed end date in the same way as the traditional 12 month AST. Instead, the tenancy continues unless and until it is brought to an end using one of the statutory grounds for possession.

For many private landlords, this will become the new default form of residential letting.

This change has raised questions for landlords who grant long leases of flats, and for landlords with portfolio interests where leaseholders sublet their units. Many long leases of flats will contain a clause allowing subletting but imposing restrictions along the following lines-

“You can underlet the flat without the landlord’s consent provided the subletting is by way of an assured shorthold tenancy, and provided no security of tenure is created.”

If ASTs are being abolished, does that mean these lease clauses will become redundant? Do leaseholders now need to vary their leases? Will leaseholders through a change in law find themselves in breach of their leases? Do they need landlord’s consent for every new letting? The short answer is no, as this is dealt with directly in the Act.

The legislation contains provisions which provide that where a lease granted before the new law came into force refers to an assured shorthold tenancy, it is to be treated as referring to an assured tenancy instead.

In practical terms; this means that existing subletting clauses which refer to ASTs will continue to operate under the new tenancy regime. There is no automatic need to vary leases purely because ASTs no longer exist. Leaseholders will also not find themselves in breach of their leases.

The legislation also deals with concerns around vacant possession; under the new regime, assured tenancies will generally be periodic and may not align neatly with fixed lease expiry dates. The Act therefore provides that where a leaseholder cannot return the premises free of a subtenant due to the new tenancy structure, that failure will not, of itself, amount to a breach of covenant.

Importantly, this does not remove a landlord’s wider control over subletting. Any existing requirements in a lease relating to minimum or maximum term lengths, use restrictions, form of agreement, or general conditions on underletting remain fully effective.

For most landlords, no immediate variation will be required solely because of the change in tenancy type. Existing lease provisions referring to ASTs should continue to function as intended.

However, portfolios should still be reviewed. In particular; where leases impose specific term requirements that may not sit comfortably with periodic tenancies, where landlords rely on vacant possession covenants on lease expiry, and where underletting clauses are tightly drafted and may give rise to interpretative issues.

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