Beyond the shopfront: How the Renters' Rights Act will reshape residential lettings in retail property

The landscape of residential lettings is about to change dramatically – and if you manage mixed-use retail properties with residential flats, you need to prepare now.

For those managing retail property portfolios that include residential units – whether they're flats above high street shops, apartments within shopping centres, or mixed-use developments – the Renters' Rights Act 2025 represents the most significant regulatory shift in nearly four decades.

With the government having now published its implementation timetable, we have much needed clarity on when these changes will take effect. In this article, we take a closer look at how retailers can use this crucial window to adapt their operations.

Why this matters for retail property managers

If your portfolio includes any residential lettings alongside your retail spaces, this legislation will fundamentally alter how you manage those tenancies. The changes aren't optional, and they won't just apply to new lettings – existing tenancies will be caught too. For retail property managers who may not specialise in residential lettings but have them as part of their portfolio, understanding these changes is essential.

The three-phase implementation timeline

The government has structured the rollout in three distinct phases, allowing landlords and property managers time to adapt:

Phase 1: The immediate impact, 1 May 2026

This is when the most significant changes take effect, and it's less than six months away:

• Abolition of ASTs and no-fault evictions: Assured shorthold tenancies will be replaced by assured periodic tenancies.
• Reformed possession grounds: New rules for regaining possession of properties.
• Rent increase limits: Restrictions on how often and how you can increase rent.
• Ban on rental bidding and excessive rent in advance: No more accepting offers above asking rent or demanding large upfront payments.
• Anti-discrimination measures: Prohibition on discriminating against families with children or benefit recipients.
• Pet policies: Obligation to consider requests to keep pets.
• Enhanced enforcement: Strengthened local council powers and rent repayment orders.

Phase 2: Registration and oversight, late 2026 onwards

• Private Rented Sector (PRS) Database: Rollout begins in late 2026, with further regulations to follow detailing the annual fee structure.
• PRS Ombudsman: Establishment of the ombudsman scheme, though landlords are unlikely to be required to join until 2028 (allowing time for the system to be properly set up).

Phase 3: Long-term standards (dates subject to consultation)

• Decent Homes Standard: Introduction most likely planned for either 2035 or 2037. 
• Awaab's Law extension: Application to the private rented sector (timeline to be confirmed).
• MEES reform: Whilst not part of the Renters' Rights Act, the government aims to reform Minimum Energy Efficiency Standards by 2030, requiring all domestic privately-rented properties to meet EPC standard C or equivalent.

The end of an era: Goodbye to assured shorthold tenancies

From 1 May 2026, assured shorthold tenancies (ASTs) – the tenancy structure that has dominated the private rented sector since the late 1980s – will be abolished and replaced by periodic tenancies, fundamentally changing the landlord-tenant relationship.

What this means in practice:

• No more fixed terms: You'll no longer be able to lock tenants into minimum fixed-term agreements. Instead, tenants will be able to terminate on two months' notice at the end of any rent period.
• Loss of no-fault evictions: The defining feature of ASTs – the ability to terminate a tenancy on two months' notice without providing a reason – will disappear entirely from 1 May 2026.
• Possession only through specified grounds: To regain possession, you'll need to rely on the amended grounds in Schedule 2 of the Housing Act 1988. For instance, if you need to sell a property or require it for yourself or a close family member, you'll need to wait 12 months and provide four months' notice.

Rent control measures you need to know

From 1 May 2026, the Act introduces significant restrictions on rent increases and upfront payments:

• Annual rent reviews only: Rent can only be increased once per year using the statutory mechanism in the Housing Act 1988.
• No backdating: If a rent increase goes to the First-tier Tribunal, any increase will only apply from the date of the Tribunal's decision, not retrospectively.
• Restrictions on rent in advance: The Act limits landlords' ability to request rent payments in advance – a practice that may have been useful for managing cash flow on smaller residential units.
• Ban on rental bidding: You cannot accept offers above the asking rent, even in competitive markets.

Operational changes that will impact your day-to-day management

Beyond the headline changes, several provisions will require adjustments to your standard operating procedures from 1 May 2026:

Tenant selection and discrimination

You'll be prohibited from discriminating against families with children or tenants receiving benefits – considerations that must be factored into your letting criteria.

Pet policies

You cannot unreasonably refuse a tenant's request to keep a pet. For retail properties with residential units, this may require reviewing building policies and insurance arrangements.

Written tenancy statements

You must provide tenants with written statements of tenancy terms in a government-specified format – adding to administrative requirements.

Registration requirements

From late 2026, landlords will need to join the Private Rented Sector Database (with an annual fee to be confirmed in forthcoming regulations). Membership of the Landlord Ombudsman Scheme will follow, likely becoming mandatory in 2028.

Property standards: A longer timeline than expected

One piece of positive news in the implementation timetable is that the most demanding property standards have been pushed back significantly.

Decent Homes Standard

The Decent Homes Standard won't be introduced until 2035 or 2037 – giving property managers over a decade to bring properties up to standard. This is particularly important for retail property managers dealing with older high street buildings or heritage properties where residential units may require substantial investment.

Awaab's Law

Awaab's Law, which will impose strict timetables for addressing damp and other serious health hazards, will also be introduced in Phase 3, with dates to be confirmed following consultation.

For retail property managers, this extended timeline is crucial. Residential units above shops or within retail developments may have unique maintenance challenges – ventilation issues, damp from commercial kitchens below, or structural concerns in older high street buildings. You now have time to plan and budget for necessary improvements rather than facing immediate compliance deadlines.

Energy efficiency

Although not part of the Renters' Rights Act, the government's intention to reform MEES by 2030 to require EPC standard C or equivalent should also be on your radar, particularly for older retail buildings with residential components.

What you should be doing now

With Phase 1 implementation on 1 May 2026 – just months away – the time to prepare is now:

Immediate priorities (before 1 May 2026)

1. Review your tenancy agreements: Your standard AST agreements will become obsolete in May. Start planning for the transition to periodic tenancies now.

2. Revise your processes: From tenant selection to rent collection, rental bidding to pet policies – every aspect of residential lettings management needs reviewing before 1 May.

3. Train your team: Ensure everyone involved in managing residential lettings understands the new requirements, especially the anti-discrimination provisions and reformed possession grounds.

4. Update your marketing materials: Remove any language about fixed terms or practices that will be prohibited from May.

5. Review rent increase schedules: If you're planning rent increases, understand the new annual limitation and statutory mechanism requirements.

Medium-term actions (2026-2028)

6. Prepare for database registration: Budget for the annual PRS Database fee (amount to be confirmed in regulations) and ensure you have systems to maintain accurate records.

7. Plan for ombudsman membership: Expect to join the PRS Ombudsman Scheme by 2028 and factor associated costs into your budgets.

8. Strengthen enforcement procedures: With enhanced local council powers, ensure your compliance is robust.

Long-term planning (2030-2037)

9. Audit your residential portfolio: Assess properties against the Decent Homes Standard and EPC standard C requirements, even though implementation is years away.

10. Develop an improvement programme: For older properties or those with known issues, create a phased improvement plan to spread costs over the available timeframe.

11. Consider your strategy: With over a decade to prepare for the Decent Homes Standard, you have time to make strategic decisions about which residential units to retain, improve, or potentially dispose of.

Accessing government guidance

The government has published comprehensive guidance for landlords and letting agents on different aspects of the Act. The implementation roadmap and detailed guidance pages are now available and should be essential reading for anyone managing residential lettings.

These resources will be invaluable as you navigate the changes, particularly the detailed guidance on specific aspects of the Act that may affect your day-to-day operations.

The bigger picture

For retail property managers, residential units have often been a secondary consideration – useful for generating additional income from upper floors or filling out mixed-use developments. The Renters' Rights Act 2025 signals that this "secondary" aspect of your portfolio will require much more sophisticated management.

The phased implementation could be seen as good news. Whilst the May 2026 changes are significant, they're largely procedural and can be addressed through updated agreements and processes. The more costly property standard requirements have been pushed back to 2035-2037, giving you over a decade to plan and budget.

The legislation represents a fundamental rebalancing of the landlord-tenant relationship, prioritising tenant security and property standards. Whilst this may seem burdensome, it also presents an opportunity to professionalise residential management within retail property portfolios and potentially differentiate your offering in the market.

The clock is ticking towards 1 May 2026, but with clear timelines now published, you can plan effectively. Use the coming months to ensure your residential lettings are ready for Phase 1, whilst developing longer-term strategies for the subsequent phases.

The retail sector has always been adaptable – now it's time to apply that adaptability to the residential components of your portfolio.