Is Rent to Rent Dead?
It’s a question a lot of people in the property world are starting to ask, and honestly, it’s a fair one.
Rent to rent has been a popular model for years. Rent to Rent has been popularised on Instagram and TikTok as a easier and lower barrier to entry into the property industry. In short, a company leases a property directly from a landlord, sublets it to tenants, and pockets the difference.
On paper, it offers landlords a guaranteed rent with no management headache, and operators a chance to build a portfolio without owning any assets. It sounds clean. In practice, it’s always carried risks, but the Renters’ Rights Act may have quietly made the whole model almost unworkable on the back end of the contract.
Here’s why.
The eviction problem nobody’s talking about
When the Renters’ Rights Act comes into force on the 1st May 2026, and with Section 21 being abolished, landlords will lose the ability to serve a no-fault eviction notice.
That’s been well covered.
What’s been far less discussed is what this means specifically for rent to rent operators when a lease comes to an end.
Under a rent to rent arrangement, the tenants in occupation aren’t the landlord’s tenants, they’re the operator’s. The contract is between the landlord and the company. When that company lease expires and the operator wants to hand the property back, they need to return it with vacant possession. That means no tenants in situ.
The problem? The operator has no Section 21 to use, and no fixed contracts to rely on.
Section 21 has always been a landlord’s tool, not available to companies subletting under a common law tenancy or a company let structure. But historically, operators could work around this because the broader legal environment was more flexible, and tenants often left voluntarily at the end of a fixed term when properly managed.
Now, with the assured tenancy framework being reshaped and no-fault eviction gone entirely and all tenancies being periodic, an operator who has placed a tenant under an assured tenancy (which many rent to rent occupants effectively are) has no clean exit route. You’re left relying on one of the prescribed grounds under the new regime, most of which are either slow, contested, or uncertain. Especially in the scenarios we’re talking about here.
Wanting to hand the property back to the landlord is not a ground for possession.
What this means in practice
Say a rent to rent operator signs a three-year lease on a Bristol HMO. They fill the rooms, collect the rent, pay the landlord their guaranteed amount every month. Three years later, the landlord wants the property back – maybe they want to sell, maybe they want to self-manage, maybe the deal just ran its course and times up.
The operator now has to give vacant possession. But if tenants don’t want to leave, the operator has very few options. There is no quick mechanism to recover the property. Any possession claim under the new grounds will take months (possibly longer) and success isn’t guaranteed. The operator is stuck paying the landlord guaranteed rent on a property they can’t hand back, while managing tenants they can’t move on and absorbing all the legal costs of a contested possession.
Or the operator hands back the property to the landlord, with tenants in place which wasn’t part of the deal and likely a nightmare for a landlord with say 1 of 5 rooms occupied. With no legal way of evicting that last tenant.
That’s a serious commercial problem.
Ground 1A doesn’t help here
Some people will point to the new Ground 1A — the discretionary ground allowing possession where a landlord intends to sell. But this ground belongs to the landlord, not the operator. And even then, it’s discretionary, not mandatory. This means a court can refuse it. The landlord would need to be pursuing the possession themselves, not the company holding the intermediate lease.
The operator has no equivalent ground to rely on simply because their contract has ended.
Is there a legal workaround?
Some operators are exploring structuring their sub-tenancies as contractual licences or company lets rather than assured tenancies, which would sit outside the Renters’ Rights Act framework entirely. In theory, this gives more flexibility on possession.
In practice, this is legally complex, carries its own risks, and courts will look at the substance of an arrangement rather than just its label. A licence that looks and functions like a tenancy will be treated as one.
Others are looking at shorter occupation agreements with very clear terms, more akin to serviced accomodation but again, if the occupant has any security of tenure, you’re back to the same problem.
So is rent to rent actually dead?
Not dead – but significantly wounded, and the operators who don’t understand why are the ones who are going to get hurt.
The model still works in very specific circumstances: where operators are subletting on a commercial basis (to their own employees), where occupants are genuinely on licences (student lets with proper licence structures, for instance), where the operator has a long enough horizon that the landlord’s exit is a non-issue for the foreseeable future, or rooms are let on a booking.com/ serviced accomodation basis.
But as a mainstream strategy where you’re signing residential leases, placing assured tenants, and promising landlords a clean handback at the end – the maths no longer works. The risk of holding a property with a sitting tenant who can’t be moved, while still on the hook for guaranteed rent to the landlord, is no longer theoretical.
It’s a near-certainty for anyone running a decent-sized rent to rent portfolio.
Landlords considering these arrangements should be asking hard questions about how any operator plans to return their property with vacant possession when the lease ends. If the operator can’t give a clear, legally grounded answer then that’s your answer.
The Renters’ Rights Act hasn’t just changed the rules for traditional landlords. It may have fundamentally broken one of property investing’s most popular entry-level strategies.
Instead, talk to us about fully managed letting options where we can help take the pressure off you as a landlord with a empty propert
