The Renters’ Rights Act 2025 came into force on 1 May 2026. It introduces significant changes to residential tenancies in England and has important implications for owners, buyers and sellers of mixed-use properties.

If you own, are looking to purchase, or dispose of a mixed-use property, it is important to understand how the new legislation may affect your rights, obligations, and future plans.

What is a mixed-use property?

A mixed-use property combines commercial and residential use within the same building or title.

Common examples include:

• A retail shop with a self-contained flat above;
• A café with residential accommodation on the upper floors;
• An office building with a residential apartment attached.

Whether the Renters’ Rights Act applies will largely depend on how the residential part of the property is occupied and documented.

When does the Act apply?

The Act applies to most residential tenancies that would previously have been classed as Assured Shorthold Tenancies (ASTs).

In broad terms, the legislation applies where:

• a residential property is let to an individual or individuals;
• the property is occupied as their primary residence; and
• the arrangement is a tenancy rather than a licence.

For example, if a commercial unit and a residential flat within the same property are let under separate agreements, the residential tenancy will likely fall within the Act.

On the other hand, where the property is let under a single business tenancy, for example, where the business operator also occupies the residential flat, the arrangement may instead fall within the scope of the Landlord and Tenant Act 1954 and be treated as a business occupation, notwithstanding the residential element.

The distinction is highly fact-sensitive and professional advice should be obtained where there is uncertainty.

What to consider when selling a mixed-use property?

If you own a mixed-use property and are considering selling it subject to vacant possession, the act has made changes to how vacant possession of the residential  part can be obtained.

Previously, landlords could recover possession using a “no fault” Section 21 eviction notice. This is a notice that the Landlord would serve on the tenants to regain vacant possession of a property without needing to prove that the tenant had breached the terms of the tenancy agreement. This route has now been abolished, and the landlord is now required to provide a legal reason for possession in accordance with one of the “grounds” specified by the Act.

Please note if a Section 21 notice was served prior to 1 May 2026, the old regime (as described above) still applies. However, if the tenant fails to vacate and possession proceedings are not issued by 31 July 2026, the Section 21 notice will lapse and become unenforceable.

Among the new grounds, the Act introduces a new possession ground for landlords intending to sell – Ground 1(a).

To use this ground:

• the tenancy agreement needs to be at least 12 months old and;
• landlords must provide at least 4 months’ notice, which can be served during the initial year of tenancy provided it does not expire before the 12 month period has ended.

This means that if you are considering selling with vacant possession you need to take steps to obtain it in good time before the sale takes place. Careful planning is essential.

Where a landlord regains possession using Ground 1A, there are restrictions on re-letting the property for twelve months after the expiration of the notice period, which creates practical and commercial risks.

For example, if a proposed sale falls through after possession has been obtained, the property could remain empty for an extended period, resulting in:

• loss of rental income from the residential part of the property;
• increased insurance costs; and
• potentially higher council tax liabilities.

As a result, sellers of mixed-use properties should carefully consider:

• whether to market with residential tenants in situ;
• the timing of any possession strategy where vacant possession is genuinely necessary and;
• the credibility of any potential buyer.

What to consider when buying a mixed-use property?

If you are purchasing a mixed-use property with a residential tenant already in place, it is important to understand how the Renters’ Rights Act 2025 may affect your investment and future plans.

The changes introduced by the Act give residential tenants greater protection and place additional obligations on landlords.

Key points buyers should be aware of include:

Periodic tenancies are now the default

Landlords can no longer create new fixed-term ASTs and, since 1 May 2026, all existing ASTs have automatically converted into periodic tenancies.

This means tenancies now continue on a rolling basis unless ended in accordance with the legislation.

Tenants have greater flexibility to leave

They only need to provide 2 months’ notice at any stage of the tenancy. For buyers expecting stable long-term rental income, this creates a greater risk of unexpected vacancies.

Rent increases are more restricted

Under the new regime rent can only be increased once per year to the market rate applicable at the time by giving 2 months’ notice. Any previous rent review clauses are no longer enforceable.

Tenants can challenge the rent increases

During the 2 months’ notice period, tenants have the right to challenge the proposed rent before a tribunal if they believe it exceeds market value and the new rent will not take effect until the tribunal has made its decision.

Restrictions on rent in advance

With limited exceptions, landlords are no longer permitted to demand rent to be paid in advance apart from the amount equal to the first month’s rent. Tenants may still choose to pay rent in advance voluntarily but only after the tenancy agreement has been entered into.

New administrative obligations

Landlords are now required to provide tenants with prescribed written information explaining their rights under the new system.

Consequences for non-compliance

Failure to comply with the new requirements may lead to financial penalties.

Awaab’s Law

Awaab’s Law is expected to extend to the private rented sector in late 2026 or 2027.

The new rules are likely to impose strict time limits on landlords to investigate and remedy issues such as: damp, mould and other serious hazards.

This will place even greater importance on proactive property management and maintenance.

National landlord database

The Act also introduces a national private rented sector database. Although its implementation is expected to be phased in gradually, landlords may eventually be required to upload and keep up to date documents like the EPC and gas safety certificates, electrical installation reports etc.

Future energy efficiency requirements

Further changes are also expected to minimum energy efficiency standards for rented residential properties in the private sector from October 2030.

Privately rented properties may eventually need to achieve an EPC rating of C. This could involve significant expenditure, particularly for older mixed-use buildings where improving energy efficiency is often more complex and costly.

Final thoughts

For owners and investors dealing with mixed-use properties, the position is now considerably more complex following the introduction of The Renters’ Rights Act 2025. Matters that previously appeared straightforward may now involve greater delay, cost, and uncertainty.

Whether you are:

• purchasing a mixed-use property;
• selling a mixed-use property; or
• reviewing your options,

it is important to obtain legal advice at an early stage to ensure that you understand your obligations and avoid unexpected complications during a transaction. At Switalskis, we are happy to help. Our team can provide expert advice, practical guidance and support throughout the transaction process. You can contact us via the phone on 0808 258 8041or put in an enquiry via our website and one of our experienced team members will get in contact with you.