In short: The Renters’ Rights Act 2025 came into force on 1 May 2026, abolishing Section 21 “no-fault” evictions and raising the mandatory rent arrears threshold from two months to three. A landlord pursuing possession for arrears is now typically several months of rent out of pocket before a court hearing is even listed. Rent guarantee insurance, which covers lost rental income and eviction legal costs, has moved from a nice-to-have to a mainstream risk control.
What changed on 1 May 2026
The Renters’ Rights Act 2025 received Royal Assent on 27 October 2025 and its first phase took effect on 1 May 2026. It is the biggest reform of the private rented sector since the Housing Act 1988. Three changes matter most for landlord cash flow:
- Section 21 has been abolished. No new Section 21 notices can be served. Assured shorthold tenancies converted automatically to assured periodic tenancies and every possession claim must now be brought under Section 8 with a specific statutory ground. Serving a Section 21 notice now can attract a local authority civil penalty of up to £7,000. The transitional window for notices served before 1 May closed on 31 July 2026.
- Fixed terms are gone. Tenancies are periodic and open-ended. Tenants can leave on two months’ notice; landlords need a ground.
- The arrears bar has been raised. Under mandatory Ground 8, a landlord previously needed two months’ arrears and gave two weeks’ notice. Now the tenant must be at least three months in arrears (13 weeks where rent is paid weekly) both when the notice is served and at the court hearing and the notice period has doubled to four weeks. Arrears caused by delayed Universal Credit housing element are disregarded from the count.
Do the arithmetic on arrears
This is the part landlords tend to underestimate. Take a property let at £1,200 a month.
- Arrears must reach £3,600 before a Ground 8 notice can even be served – that is three months with no rent arriving.
- Four weeks’ notice must then run before a claim can be issued: month four.
- County courts typically list a first possession hearing four to eight weeks after issue, and busy courts take longer.
- The three-month threshold must still be met at that hearing. A tenant who pays down a few hundred pounds in the interim can defeat the mandatory ground, pushing the landlord onto discretionary Ground 10 or Ground 11, where the judge has a choice.
Realistically, a landlord is six months or more of rent down by the time possession is granted, plus legal costs, plus the strong likelihood that much of the arrears is never recovered. Ground 8A now helps with tenants who repeatedly build arrears three times in three years, but it does not shorten the timeline in a first case.
There is a second, quieter effect, because tenancies are open-ended and possession is harder to obtain, tenants stay longer. Longer tenancies are good for void periods, but they lengthen the tail of risk on any single tenant relationship.
Where rent guarantee insurance fits
Rent guarantee insurance pays the rent when a tenant does not. Paired with legal expenses cover, it also funds the possession process. For a landlord whose buy-to-let mortgage payment does not pause while a Section 8 claim works through the county court, that combination addresses the two costs the Act has made larger.
3mc has launched Rent Guarantee and Legal Expenses cover, arranged through First2Protect, aimed squarely at landlords managing the post-Section 21 environment. The cover provides:
- Continuity of rental income if a tenant stops paying, so mortgage payments and maintenance costs can still be met.
- Legal expenses cover for eviction proceedings, which matters more now that every claim runs through Section 8 and must be evidentially watertight.
- Protection against a longer exposure window, reflecting the reality that tenants stay in properties for longer under the new regime.
- Peace of mind, freeing landlords to focus on managing the property and the tenant relationship rather than the downside scenario.
Is your tenancy eligible?
Whether a tenant reference is required depends on the tenancy.
No tenant reference is needed if the tenancy has been in place for more than 12 months when the policy starts and there is no history of rent arrears, meaning no payment made one or more calendar days after the due date in the tenancy agreement.
If those conditions are not met, a reference is required, comprising a credit check from a licensed agency showing no County Court Judgments in the past three years and none outstanding; a written reference from a previous landlord or managing agent; and a written employer’s reference on headed paper confirming permanent employment with a salary of at least 2.5 times the monthly rent.
This is a summary of the key eligibility criteria. Full terms and conditions apply.
Get a quote
For rent guarantee insurance, 3mc refers customers to First2Protect, who specialise in arranging this type of cover. These links take you to an external website not operated by 3mc. We provide them for your convenience but do not control, endorse or take responsibility for the content, accuracy or privacy practices of the linked site.
Frequently asked questions
What is rent guarantee insurance? Rent guarantee insurance is a policy that pays a landlord’s rental income when a tenant fails to pay. Policies are usually sold alongside legal expenses cover, which funds the cost of recovering possession through the courts. It is separate from landlord buildings and contents insurance.
Has Section 21 really been abolished? Yes. Section 21 “no-fault” evictions ended on 1 May 2026. No new Section 21 notices can be served, and doing so risks a civil penalty of up to £7,000. Possession must now be sought under Section 8 using a statutory ground.
How much rent arrears are needed before eviction under the Renters’ Rights Act? At least three months (or 13 weeks where rent is paid weekly) for mandatory possession under Ground 8 and the threshold must be met both when the notice is served and at the court hearing. The notice period is four weeks. Discretionary Ground 10 covers arrears of any amount, but the court is not obliged to grant possession.
How long does a rent arrears eviction take now? There is no fixed answer, but the sequence is three months to reach the arrears threshold, four weeks’ notice, then a first hearing typically four to eight weeks after the claim is issued. Six months of lost rent is a realistic planning assumption and longer where courts are congested.
Does rent guarantee insurance cover the legal costs of eviction? The 3mc product arranged through First2Protect includes legal expenses cover for eviction proceedings. Cover levels, excesses and exclusions vary, so check the policy wording for what is included in your circumstances.
Do I need a tenant reference to take out a policy? Not if the tenancy has run for more than 12 months at policy start with no history of late or missed payments. Otherwise a full reference is required — credit check, previous landlord or agent reference and employer’s reference confirming salary of at least 2.5 times the monthly rent.
Is rent guarantee insurance worth it for landlords with reliable tenants? That is a judgement only you can make, and it depends on your margin, mortgage exposure and how many properties you hold. The change worth factoring in is that the Act has lengthened the worst-case scenario rather than made arrears more likely. A single bad tenancy now costs more and takes longer to resolve than it did before May 2026.
What else is still to come under the Renters’ Rights Act? Implementation is phased. The private rented sector database is being rolled out from late 2026, with registration expected to become a precondition for possession claims. A landlord ombudsman is anticipated around 2028, and the Decent Homes Standard and an extension of Awaab’s law to the private sector remain subject to consultation.
At 3mc, we have a team of expert advisers who can discuss all your mortgage requirements. If you would like to discuss your options, give the 3mc team a call on 0161 962 7800.
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About the Author: Doug Hall, Director at 3mc
This article was written by Doug Hall, a Director at 3mc, one of the UK’s leading mortgage packagers and distributors. Doug has over 29 years of experience in the mortgage and specialist lending industry, giving him an unparalleled understanding of the challenges and opportunities facing landlords, brokers, and property investors across the UK.
A recognised voice in the industry, Doug regularly speaks at major industry events and is widely respected by lenders, intermediaries, and fellow professionals alike. His insight is shaped by nearly three decades on the front line of mortgage distribution, working closely with the brokers and lenders who keep the UK property market moving.