Rent-to-Rent Under the Renters' Rights Act 2025 — Landlord Guide

What is rent-to-rent?

Rent-to-rent (also called 'guaranteed rent' or 'let-to-let') is an arrangement where a landlord (the head landlord) lets their entire property to an intermediate operator — typically a company — who then sublets the property to end tenants. The intermediate operator pays a guaranteed rent to the head landlord and profits from the margin between what they pay and what the end tenants pay.

How rent-to-rent works legally

• The head landlord grants a lease or licence to the intermediate operator — typically for 3–5 years
• The intermediate operator sublets to individual end tenants. The head landlord is not in a direct tenancy relationship with the end tenants
• The intermediate operator collects end tenant rents, manages the property, and is responsible for day-to-day compliance
• The head landlord receives a guaranteed monthly payment from the operator regardless of whether individual rooms are occupied
• Both layers of the arrangement are subject to separate legal requirements

Head landlord obligations — what has not changed

• Structural and exterior repairs: Section 11 of the Landlord and Tenant Act 1985 implies a repairing covenant on the head landlord for the structure and exterior of the building
• Consent to subletting: If the property is mortgaged, the head landlord must check their mortgage terms permit a rent-to-rent arrangement. Most buy-to-let mortgages require consent to let — subletting adds another layer that may breach mortgage conditions
• HMO licence: The head landlord is typically the HMO licence holder for properties that meet the mandatory HMO threshold, even when an operator manages day-to-day. Failure to hold an HMO licence is a criminal offence that attaches to the person in control — which is usually the operator, but can also be the head landlord depending on how control is defined
• Buildings insurance: The head landlord's buildings insurance must cover the intended use — subletting to multiple occupiers materially affects risk. Failure to disclose can void the policy

Renters' Rights Act 2025 — new obligations from 1 May 2026

• Periodic Assured Tenancies mandatory for end tenants: The intermediate operator must grant PATs (not fixed-term ASTs) to all new end tenants from 1 May 2026. The operator cannot grant fixed-term ASTs regardless of what the head lease says
• Information Sheet to end tenants: The operator must deliver the RRA 2025 Information Sheet to all existing end tenants by 31 May 2026. Head landlords should require the operator to evidence this was done
• No Section 21 for end tenants: The operator cannot use Section 21 against end tenants. All possession must be via Section 8 using a valid Schedule 2 ground
• Rent increases for end tenants via Section 13 only: The operator cannot increase end tenant rents via a contractual rent-review clause — only via Section 13 notice (Form 4A)
• Property Portal registration: The head landlord must register on the Property Portal — the Portal registers the property and the head landlord as the registered person, even in a rent-to-rent. Check current implementation guidance from MHCLG
• PRS Ombudsman membership: The operator must be a member of the private rented sector redress scheme as the immediate landlord. Head landlords should verify this before signing a rent-to-rent agreement

Rent Repayment Orders — head landlord liability risk

Rent Repayment Orders (RROs) are one of the most significant risks in rent-to-rent arrangements for head landlords:

• An RRO requires a landlord to repay up to 12 months' rent to a tenant or local authority where a qualifying offence has been committed
• The First-tier Tribunal (Property Chamber) can make an RRO against the head landlord where the operator has committed a qualifying offence — because the head landlord receives rent in respect of the property
• Qualifying offences include: operating an unlicensed HMO, using a banned letting agent, illegal eviction or harassment, failure to comply with an improvement notice, and from May 2026 — breach of Renters' Rights Act 2025 obligations
• The Upper Tribunal has confirmed that head landlords can be the target of RROs in rent-to-rent cases — the landlord does not need to be the person who committed the offence, only the person who received the rent
• Due diligence on the operator is essential: check their accreditation, licence history, and compliance record before entering a rent-to-rent agreement

What to check before signing a rent-to-rent agreement

• Operator compliance credentials: Is the operator a member of a recognised property management accreditation scheme? Do they have a track record of compliance?
• HMO licence status: Will the property require an HMO licence? If so, who will hold it — the operator or you? Confirm in the agreement
• Mortgage consent: Does your mortgage lender permit subletting under a rent-to-rent arrangement? Obtain written confirmation
• Insurance: Does your buildings insurance cover multiple occupiers under a subletting arrangement? Notify your insurer in writing
• RRA 2025 compliance obligations: Ensure the rent-to-rent agreement expressly requires the operator to: serve the Information Sheet, grant PATs to end tenants, comply with Section 13 for rent increases, and maintain HMO licence compliance
• RRO indemnity clause: Include a clause requiring the operator to indemnify the head landlord for any RRO liability arising from the operator's breach of housing or licensing law
• Exit provisions: How does the arrangement end? If the operator wishes to surrender or becomes insolvent, who is responsible for the end tenants' PATs — which continue as PATs with the head landlord as the immediate landlord on the operator's exit?

What happens to end tenants if the operator exits?

One of the most legally complex aspects of rent-to-rent under the RRA 2025 is what happens on the operator's exit:

• If the operator surrenders the head lease to the head landlord, the end tenants' PATs do not automatically terminate — they continue and the head landlord steps into the operator's shoes as the immediate landlord
• The head landlord inherits the end tenants, their rent levels, and all ongoing PAT obligations
• Head landlords should model this scenario before signing: if the operator exits after 3 years, what rents are the end tenants paying, and are they at market rate?
• Head landlords cannot use Ground 1A (sale) to remove inherited end tenants unless they personally intended to sell — the grounds must be genuine

LetSafe UK documents for rent-to-rent landlords

• Periodic Assured Tenancy Agreement (LS-E-001): Operators must use a PAT for all new end tenants from 1 May 2026 — ensure your agreement requires the operator to use an RRA 2025-compliant form
• Section 8 Notice (LS-E-010): Revised Form 3A — the only valid possession notice for end tenants from 1 May 2026