Hundreds of thousands of landlords risk £19,000 bill under Labour crackdown

Around 400,000 landlords are currently operating without any form of insurance, leaving many exposed to significant costs if things go wrong.

This comes as the Renters' Rights Act takes effect on 1 May, in what experts describe as the most significant shift in renting law in a generation.

Under the new rules, Section 21 "no-fault" evictions will be scrapped, meaning landlords who need to regain possession of their properties will have to rely on a court process, which can take longer and add to overall costs.

Research shows eviction costs already range between £12,708 and £19,223 when lost rent is factored in, with London landlords facing the highest bills.

Industry figures warn these costs will climb further under the new regime, with legal fees alone expected to reach at least £3,000 per case.

Under the new rules, any landlord seeking to remove a tenant must go through Section 8 of the Housing Act 1988, a court-based process that typically drags on for six to twelve months.

During this period, property owners can be left without any rental income whatsoever.

The Act also raises the bar for mandatory possession orders. Landlords must now prove three months of unpaid rent before courts are required to grant eviction under Ground 8, up from the previous two-month threshold.

This combination of extended timelines and stricter requirements creates a much wider window where landlords receive no payment, precisely the gap that specialist insurance is meant to bridge.

Around 4.6 million households currently rent privately in England, making this one of the largest segments of the UK housing market affected by the changes.

Craig Morgan, insurance expert at SJL, says the new legislation fundamentally alters the financial risk when tenancies go wrong.

"The Renters' Rights Act doesn't just change how landlords manage tenancies, it fundamentally changes the financial stakes when something goes wrong," he said.

"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."

Mr Morgan added that rent guarantee and legal expenses insurance can protect landlords throughout the entire process, yet a huge number still lack this cover.

The higher arrears threshold, combined with longer court proceedings and the end of no-fault evictions, creates what he describes as a potentially catastrophic financial window for those without proper protection.

The financial pressure is already driving landlords away from the market in droves. A survey of more than 1,000 property owners across England by consultancy Allsop found nearly 42 per cent plan to stop renting out homes altogether once the Act takes effect.

Almost half, around 48.4 per cent, intend to sell some or all of their rental properties, while others are preparing to hike rents to offset rising costs.

Property experts have warned Labour's reforms could backfire, as landlords lose control over who occupies their homes, how long tenants stay, and what they can charge.

Those remaining in the market are scrambling for protection. One analysis found enquiries for rent guarantee insurance jumped 41 per cent between September and December 2025 as landlords braced for the new regime.

Despite the sweeping changes, many tenants remain in the dark. Research from specialist insurer Hiscox reveals over a third of UK renters, some 37 per cent, are still unaware the new rules are coming.

More than half, at 55 per cent, do not understand how the legislation will affect them, while 46 per cent had no idea their fixed-term tenancies will automatically convert to rolling agreements.

The Act does bring significant protections for tenants, including limits to one rent increase annually, a ban on bidding wars, and the right to end tenancies with two months' notice.

Michael Dear, Landlord Insurance Product Lead at Hiscox, says: "The Renters' Rights Act coming into force in May 2026 brings greater security and clearer protections for tenants, including limits on rent increases and the end of fixed-term tenancies.

"These changes aim to make renting fairer, and give tenants more control and peace of mind in their homes."