Private property landlords facing compliance headache from double new legislation
Private property landlords are facing a significant compliance change in the private rented sector (PRS) in 2026, with the introduction of Making Tax Digital in April and the Renters Rights’ Act this month.
Tom Young, director and property specialist at HWB Chartered Accountants in Hampshire, believes this could lead to considerable frustration and confusion across the sector.
Making Tax Digital, the most significant change to the UK’s personal tax system since Self-Assessment was introduced in 1997, was launched on 6 April 2026.
Property landlords – along with sole traders – with gross annual income above £50,000 from property and/or self-employment must now comply with the legislation.
Digital records of income and expenses must be kept using HMRC-approved MTD-compatible software and submitted to HMRC on a quarterly basis as well as a final end-of-year declaration.
Tom said: “There are a significant number of landlords, particularly those without accountancy representation that are unaware of MTD and the reporting requirements.
“It is concerning that this remains the case when the first quarterly update, covering the period April to June is due on 7 August. Confusion at this stage is not a good sign and is certainly indicative of a lack of public information on the subject.
“Although HMRC is not imposing any penalties for non-compliance in the first year, I fear there will be a lot of frustration to come, especially when the threshold reduces to £30,000 next year and £20,000 the year after.
“On the flip side, this a major shift from the traditional annual Self-Assessment process to a system that is much closer to real-time reporting, which will allow landlords to monitor the performance of their portfolios and make astute strategic decisions.
“We urge landlords to not hesitate and act swiftly in taking regulated professional advice if they have yet to register for MTD. It is important to be proactive and ready for the next two milestones even if they are not in the scope of the legislation for 2026.”
Latest available figures show that there are around 2.82 million private landlords in the UK, of which around 94% are private individuals. Around two-fifths (43%) of UK landlords have just one property in their portfolio.
The Renters’ Rights Act was introduced on 1 May and strengthens the rights of tenants by abolishing Section 21 ‘No-Fault’ Evictions. It also ends fixed-term contracts in favour of rolling ones, limits rent increases to once per annum, bans bidding wars and makes it illegal to discriminate against people because they have children or are on benefits.
Tom added: “Given that local councils may impose a civil penalty of up to £40,000 or, in some cases, start a criminal prosecution for non-compliance, is it any wonder that private landlords are feeling hard done by.
“It is, of course, imperative that renters’ rights are protected, but we believe the vast majority of private landlords are honest, upstanding citizens who pride themselves on being scrupulously fair.
Landlords must provide tenants with the official Renters’ Rights Act Information Sheet 2026 by 31 May 2026 and may incur fines up to £7,000 per tenancy if they fail to do so. The information sheet provided to tenants must be the official PDF from GOV.UK and cannot be altered.
“Last year the value of the private rental sector declined by 5.1 per cent, or £48 billion, with 15% of South East landlords planning to sell this year. Some 220,000 rental properties are expected to disappear this year, many being put on Airbnb instead. That’s a big chunk of private accommodation lost.
“Thus, we could have a situation where the government’s stated intentions behind the Renters’ Rights Act could have exactly the opposite effect – constricting the market, restricting choice and driving up rents.”
It was also reported last week that chancellor Rachel Reeves was considering imposing a one-year rent freeze on private-sector homes to help mitigate rising household costs due to the Iran war.
The idea had previously been ruled out, but ministers were said to be open to discussions on a limited period ban on rent increases in the next few weeks.
The National Residential Landlords Association has warned that the move would be a ‘disaster’ for landlord and investor confidence, drive new rents higher and potentially lead to a downturn in the supply of private rented homes.
Tom added: “Private landlords are facing possibly the most challenging and stress-inducing period for a generation. The sensible course of action is to seek professional help.”