Renters’ Rights Act ‘turning point’ for landlord insurance risk exposure

The Renters’ Rights Act 2025 is a “major turning point for landlords” and “changes how landlords need to think about risk”.

That is according to James Cooper, trading director for broker Everywhen, who was responding to the Renters’ Rights Act coming into force from 1 May 2026.

The new legislation includes abolishing ‘no-fault’ evictions under section 21 of the Housing Act 1988. This has withdrawn landlords’ ability to end a tenancy without a legal reason and evictions must instead pass section eight grounds for removal such as rent arrears or malicious property damage.

Cooper said that when the removal of section 21 is “combined with oversight of rent increases, property standards and transparency, it creates a very different operating environment”.

He continued: “Much of this should be positive for the health of the market in the longer-term, but it does mean landlords will need to be more prepared and more deliberate.

“Reviewing tenancy structures, understanding how rent reviews will be assessed and making sure properties and insurance arrangements are fit for the new framework will be essential. Those who engage early will be far better placed to adapt as the changes take effect.”

Needing insurance 

In turn, having appropriate insurance is essential.

However, according to Alan Boswell Group, there are currently 400,000 UK landlords operating with no insurance at all.

Craig Morgan, sales director at commercial and property insurance specialists SJL Insurance Brokers, said that the change in law “fundamentally changes the financial stakes when something goes wrong” and was concerned about the lack of landlords with insurance.

He explained: “An eviction that once cost a few hundred pounds to initiate now can easily cost thousands in legal fees alone, before you even count a single month of lost rent.

“Rent guarantee and legal expenses insurance can cover landlords through the entire process and yet a huge number of landlords still don’t have it in place.”

However, a greater number of rent guarantee products and expanded offerings have entered the market.

Speaking to Insurance Times, Nick Copley, head of claims at Alps, said he expects a shift from brokers offering the product as an optional add-on alongside the core landlord’s property insurance.

He said: “There are a lot of landlords that would previously opt for the legal expense product only in the knowledge that, on most occasions, it will be a relatively quick process to be able to have someone evicted if they stop paying.

“But the rent guarantee policy is going to be most landlords’ essential product going forward. I would expect brokers to be offering this as standard.”

Market exits?

However, while the industry is prepared for the new legislation, half of landlords (49%) said that they are planning to sell or reduce their stake in the market within the next 12 months.

That is according to lettings platform Goodlord’s latest research, published on (14 April 2026), which found that four in five landlords (82%) expressed concern about the impact of the legislation.

John Armstrong, technical improvement director at Sedgwick, said that over the past couple of years he has seen “landlords with small property portfolios moving out of the market”.

This contraction is already creating challenges for adjustors.

He said: “We find it very difficult to find accommodation for landlord’s tenants after they’ve suffered a disaster these days.

“So, we’ve had to find more imaginative solutions with the money that’s available, whether that be mobile homes or petitioning the property. We’ve seen this coming for a while and now it’s happened – but everybody in the market knows it’s going to hit.”

As a result, Armstrong expects the market to respond to the heightened risk by “tightening policy cover and limits”, as “insurers will see a greater exposure on these types of claims in the future”.

In particular, he noted that insurers currently tend to “put limits on malicious damage by tenants” and he imagines that these restrictions will tighten further.

He said: “We do see quite a lot of claims associated with when relations are broken down between landlords and tenants and the tenant is damaging the property and not paying the rent.

“The Renters’ Rights Act will make it more difficult for the landlord to take action in that situation. They’ve got to go to the extent of obtaining it if the tenant won’t leave after three months of not paying the rent. If they won’t leave, the landlord has to get a court order to remove them which might take a year or more to achieve – and while that’s happening relations will be poor.

“I imagine when the landlord gains possession again, the building might be in a bit of a state.”