The Renters' Rights Act and Your Prime London Property: Hold, Switch, or Sell

On 1 May 2026 the private rented sector in England changed more than it has in thirty years. Section 21 is gone. Fixed terms are gone. Every assured shorthold tenancy in the country converted to a periodic tenancy overnight.

If you own a flat or house in Belgravia, Knightsbridge, Chelsea, Mayfair, Notting Hill or South Kensington, you have four options and they are not equally good. This guide sets out what actually changed, what prime central London property is achieving on each route, and how to work out which applies to yours. Where selling or holding is the right answer, we say so.

What Actually Changed, and When

The Renters' Rights Act 2025 received Royal Assent on 27 October 2025. Its main provisions commenced on 1 May 2026. That gap matters, because a great deal of the market reacted to the Act a year before it did anything.

Four changes affect you directly.

Section 21 is abolished. The final no-fault notices could be served on 30 April 2026. You can no longer recover your own property simply by giving notice. Every possession claim now runs through a Section 8 ground, and you must be able to evidence it.

Fixed terms no longer exist. All existing assured shorthold tenancies became assured periodic tenancies on 1 May 2026, and no new fixed-term tenancy can be created. Your tenant can end the tenancy on two months' notice at any point. You cannot.

Rent can be increased once a year, by Section 13 notice. Rent review clauses are unenforceable. You serve the prescribed form, the tenant may challenge the increase at the First-tier Tribunal for a £47 fee, and the tribunal determines market rent. Advance rent beyond the first payment is prohibited, and so is inviting offers above the advertised rent.

Grounds now carry long notice periods. Ground 1, where you or a close family member move in, and Ground 1A, where you intend to sell, each require four months' notice and cannot be used in the first twelve months of a tenancy.

More is still to come. The private rented sector database is expected to roll out from late 2026, the landlord ombudsman in 2028, and the Decent Homes Standard by 2035. Detail on each sits with the NRLA's guidance.

Why Prime Central London Is Affected Differently

Most commentary on the Act is written for a landlord with a two-bed terrace in Zone 4. The economics in SW1X are not the same, and neither is the arithmetic of what to do next.

Beauchamp Estates' Millionaires Letting in London Survey 2026 recorded prime London lettings transactions falling from 3,814 in 2024 to 3,442 in 2025, a 6% contraction, with total transaction value down from £379.44m to £356.28m. Beauchamp attributed the decline to landlords leaving the sector over the Renters' Rights Act and the tax changes.

Note the year. That contraction happened in 2025, before the Act commenced. Roughly 372 prime landlords stopped letting in anticipation. They still own the properties.

Underneath that headline, rates moved in opposite directions:

Two things follow. Prime houses saw long-let values fall while short-let values nearly doubled, which is the widest gap in the market. Prime apartments, which are most of the stock, show a real but far more modest premium of around a fifth. Any operator quoting you a single uplift figure across both is not looking at your property.

Option 1: Hold the Long Let

A lot of prime owners should stay exactly where they are. That is worth saying before the alternatives.

Hold if you have a good long-term tenant paying reliably. The Act strengthened tenants' rights. It did not turn a paying tenant into a liability. Ground 8 still gives mandatory possession where three months' rent is unpaid, on four weeks' notice.

Hold if your lease prohibits short lets and mid-term letting is impractical for the building. Many prime central London leaseholds restrict occupation to a single household or bar lettings under a defined term. That restriction does not care what the market is paying.

Hold if you want the asset managed passively. A long let is a single relationship and a monthly payment. Short and mid-term letting is an operating business with cleaning, turnover, compliance and guest management attached, whether you run it or pay someone to.

Hold if your property is genuinely better suited to a family than a visitor. A five-bedroom house on a quiet garden square with no lift and a difficult entrance will let long beautifully and short poorly.

What has changed is your flexibility. You cannot end the tenancy on a whim, you cannot raise the rent more than annually, and the tenant can leave on two months' notice. Hold with that understood.

Option 2: Switch to Short Let

The premium is real and, for houses, it is very large. It also comes with a legal cap, and with costs that the gross weekly figures hide.

The 90-day rule. Under the Deregulation Act 2015, a Greater London property may be used for short-term accommodation for a maximum of 90 nights in a calendar year without planning permission. Per property, cumulative, January to December. Exceed it and you are in breach of planning control. The borough can enforce and can fine you.

There are two lawful routes past 90 nights. You can apply for planning permission for change of use, which in Westminster and RBKC is granted sparingly and is worth attempting only where the building supports it. Or you can fill the remaining 275 nights with lettings of 90 or more consecutive nights to a single household, which fall outside the cap entirely because they are residential occupation rather than temporary sleeping accommodation. Our full guide to the 90-day rule sets out both.

The costs the weekly rate does not show. A £2,142 weekly short-let rate is not £111,384 a year. Occupancy in prime central London is seasonal, cleaning and linen recur on every changeover, the platform takes commission on every booking, furnishing and consumables are ongoing, and specialist short-let insurance is required before the first guest arrives. A conventional buy-to-let policy will not cover you and may be voided by a short-let booking.

The lease comes first. Before anything else, the lease must permit it. We will not operate a property whose lease prohibits short letting, and any manager who does not check is exposing you to forfeiture proceedings from your freeholder.

Where the lease permits it, the building suits it and the location carries the rate, the annual figure after costs is usually much better than a long let. Where any one of those three fails, it is not.

Option 3: Mid-Term Lets of Ninety Consecutive Nights or More

Almost nobody explains this one, and for a lot of prime central London properties it is the right answer.

A letting of 90 or more consecutive nights to the same household does not count towards the 90-night cap. In planning terms it is residential occupation, not temporary sleeping accommodation, so the cap does not reach it. That one fact changes everything, because it means a property can run short-let through the highest-rate weeks of the year and take one or two longer bookings for the rest, without ever going near the cap or needing planning permission. Note the word consecutive. A run of separate 30-night stays does not qualify and every night of it counts towards your 90.

The demand is real and it is specific to your postcodes. Corporate relocations into central London, usually three to twelve months. Families between purchases, or renovating. Visiting academics and medical patients attending Harley Street. Diplomatic and embassy postings. Overseas families placing children in London schools for a term. All of these book in the blocks the rule requires.

Rates sit between long-let and short-let levels, with far lower turnover costs than short letting and none of the 90-day exposure. Occupancy tends to be higher and more predictable. For an apartment where the short-let premium is a fifth rather than double, a mid-term-weighted calendar often produces a better annual net figure than short-letting alone, and with less work.

Where a lease prohibits short lets, it will often still permit lettings above a defined minimum term, and a three-month booking clears most of those thresholds. That is worth checking before concluding the property cannot be repositioned at all.

Option 4: Sell

Sometimes this is the right answer, and a guide that never says so is a sales document rather than advice.

Sell if the lease prohibits both short and mid-term letting, the building is difficult, and the long-let yield no longer justifies holding a prime central London asset. Sell if the property needs money spent on it that you would rather not spend, particularly with the Decent Homes Standard arriving by 2035. Sell if your circumstances have changed and the property is a legacy holding rather than an investment.

The abolition of the Furnished Holiday Lettings regime in April 2025 removed several reliefs that previously improved the case for holding and operating, including capital allowances and the more favourable capital gains treatment. That changes the after-tax comparison for some owners. Our guide to what the abolition costs a London owner sets out the annual figure, and it is worth putting to your accountant before you decide.

The Trap: Do Not Use Ground 1A If You Intend to Let Again

This is the most expensive mistake a prime landlord can make this year, and hardly anyone is talking about it.

Ground 1A allows you to recover possession because you intend to sell. It requires four months' notice and cannot be used within the first twelve months of a tenancy. Ground 1, where you or a close family member intend to move in, works the same way.

Both grounds carry a twelve-month restricted period afterwards. For twelve months from the later of the notice expiry or the court filing date, you may not re-let the property or grant a licence to occupy it. Granting a licence to occupy covers short-let and holiday-let arrangements, so that route is closed too.

So the obvious plan, serve notice to sell, get the property back, put it on a short-let platform, does not work. It removes the property from any letting use for a year, and doing it anyway is a breach with penalties attached.

If your intention is to reposition rather than exit, you need a different route: an agreed surrender, waiting for the tenant to give their own two months' notice, or a ground that genuinely applies to your circumstances. Take advice before serving anything.

How to Tell Which Option Applies to Your Property

Five questions, in this order. The first one decides more cases than the other four combined.

1. What does the lease say? Read the alienation and user clauses, not the summary. If short lets are prohibited, options two is closed and option three may still be open. If the lease is silent, it still needs a solicitor's eye, because the covenant that catches you is rarely the one headed "subletting".

2. Is it a house or an apartment? The short-let premium on prime houses is close to double. On apartments it is around a fifth. The same decision framework produces different answers for each.

3. Which street, and which building? A lateral apartment on a garden square with a porter performs very differently from a third-floor walk-up two streets away. Rate ceilings in prime central London are set street by street, not by postcode.

4. How many bedrooms? Two and three-bedroom apartments generally show the widest short-let premium relative to their long-let rate. One-bedroom flats and very large houses tend to show the narrowest, for opposite reasons.

5. How much involvement do you want? An honest answer here saves a great deal of regret. Short letting is an operating business. If you want a monthly payment and no telephone calls, either accept a long let or accept paying someone to run the other thing properly.

Your Questions Answered

Can I still evict a tenant under the Renters' Rights Act?

Yes, but only on a Section 8 ground you can evidence. Section 21 no-fault notices ended on 30 April 2026. Ground 8 covers three months' rent arrears on four weeks' notice. Grounds 1 and 1A, moving in and selling, each require four months' notice and twelve months of tenancy first.

Does the Renters' Rights Act apply to short lets?

No. The Act governs assured tenancies in the private rented sector. Genuine short-term and holiday lets fall outside it. That is one reason owners are looking at repositioning, though the 90-day planning cap and your lease terms both still apply.

How much more does a short let earn in prime central London?

Beauchamp Estates recorded prime London short-let houses at £4,974 a week in 2025 against £2,499 for a long let, and apartments at £2,142 against £1,770. That is roughly double for houses and about a fifth more for apartments, before occupancy, cleaning, commission and insurance are deducted.

Can I short-let my London property for more than 90 nights a year?

Only with planning permission for change of use, which Westminster and RBKC grant sparingly. Otherwise the cap is 90 nights per calendar year per property under the Deregulation Act 2015. Lettings of 90 or more consecutive nights to one household sit outside the cap and can fill the remaining calendar lawfully.

My lease may not allow short lets. What are my options?

Have the lease read properly before doing anything. Where short letting is prohibited, longer lettings of ninety consecutive nights or more are often still permitted and can outperform a conventional long let. Where everything is prohibited, holding or selling are the remaining options.

How often can I increase the rent now?

Once every twelve months, by serving a Section 13 notice on the prescribed form. Rent review clauses in existing agreements are no longer enforceable. Your tenant may challenge the proposed increase at the First-tier Tribunal for a £47 fee, and the tribunal will determine the market rent.

Should I sell my prime London rental property?

Sometimes, and we will tell you when we think so. Selling makes sense where the lease blocks every alternative, the building is difficult, or capital expenditure is needed that you do not wish to fund. It rarely makes sense purely because the long-let route became less flexible.

What happens to my existing tenancy agreement?

It converted automatically on 1 May 2026. Any fixed term became an assured periodic tenancy, your tenant can now end it on two months' notice, and any rent review clause it contains is unenforceable. You do not need to issue a new agreement, but the old terms no longer all apply.

What We Would Do Next

Read the lease first. Everything else follows from it, and most owners have not read theirs since completion.

Then get a number on your specific property rather than a market average. We will model what your building and bedroom count achieves on each of the three letting routes, against achieved transaction data rather than asking prices, with the lease and 90-day position checked. It is free, it takes twenty-four hours, and if the answer is that you should hold or sell we will put that in writing too.

This guide is general information about the position in England as at September 2026, not legal or tax advice. Take advice on your own lease and circumstances before serving any notice or changing the use of your property.