Renters' Rights Act 2026 Countdown: Should London Landlords Switch to Short-Term Lets or Adapt Their Buy-to-Let Strategy?

With the first provisions of the Renters' Rights Act now confirmed to take effect from May 2026 - just three months away - London landlords are facing one of the most consequential decision points in a generation. The abolition of Section 21 "no-fault" evictions, tighter rent-increase rules, and a new Decent Homes Standard for the private rented sector are no longer distant policy proposals. They're about to become law.

At the same time, the short-term rental market has its own shifting landscape: the 90-night rule in London, April 2025's Furnished Holiday Lettings (FHL) tax changes, and growing council enforcement. So what's the smartest move for a London property investor right now?

Let's break it down.

What the Renters' Rights Act Actually Changes

If you've been keeping half an eye on the headlines but haven't dug into the detail, here's what matters most for London landlords:

• Section 21 is gone. You will no longer be able to end a tenancy without grounds. Evictions will require a valid reason under revised Section 8 grounds - such as rent arrears, antisocial behaviour, or the landlord needing to sell or move in.
• Rent increases are capped to once per year, and tenants can challenge above-market increases through a tribunal. No more mid-tenancy hikes or strategic rent reviews.
• A new Decent Homes Standard applies to the private rented sector, meaning your property must meet specific fitness criteria - not unlike social housing requirements.
• A Property Portal and Ombudsman will be established, giving tenants new routes to report issues and giving councils better tools to identify non-compliant landlords.

For landlords who have managed tenancies professionally and maintained good relationships with tenants, much of this is simply formalising best practice. But for those who have relied on the flexibility of Section 21 - particularly to manage problematic tenancies or reposition properties - the change is significant.

The Case for Switching to Short-Term Lets

It's no surprise that some landlords are looking at Airbnb and serviced accommodation as an alternative. The appeal is clear:

Higher Potential Yields

A well-managed short-term let in a strong London location can significantly outperform traditional rental income, particularly in zones 1–3 and near transport hubs, exhibition centres, and tourist hotspots. Nightly rates of £120–£250+ for a one-bedroom flat aren't unusual in areas like Shoreditch, Kensington, or Canary Wharf.

Greater Flexibility

With short-term lets, you retain control of your property. There's no long-term tenancy to navigate if you want to sell, renovate, or change strategy. In a post-Section 21 world, that flexibility becomes more valuable than ever.

Growing Demand

London continues to attract record numbers of international visitors, business travellers, and relocating professionals who prefer serviced accommodation over hotels. Demand for quality short-term lets remains robust.

But It's Not Without Challenges

Before you list your property on Airbnb this weekend, there are real constraints to consider in the London market:

The 90-Night Rule

In most London boroughs, you can only let your entire property on a short-term basis for 90 nights per calendar year without planning permission. Exceeding this without approval can result in enforcement action and fines. Some landlords apply for a change of use, but success varies by borough and isn't guaranteed.

The End of FHL Tax Advantages

As of April 2025, the Furnished Holiday Lettings tax regime was abolished. This means short-term landlords no longer benefit from capital allowances on furnishings, favourable capital gains treatment, or the ability to count rental income as earnings for pension contributions. The tax playing field between short-term and long-term lets is now much more level.

Operational Demands

Short-term letting is operationally intensive - guest communication, cleaning turnovers, linen management, pricing optimisation, and compliance with safety regulations. It's a hospitality business, not a passive income stream. This is precisely where working with a professional management company like Airhosts makes the difference, handling every aspect of Airbnb hosting so landlords can earn more without the day-to-day burden.

The Case for Adapting Your Buy-to-Let Strategy

For many London landlords, the smarter move may not be to abandon long-term letting but to adapt.

Invest in Compliance Early

Don't wait until May to audit your properties against the incoming Decent Homes Standard. Address damp, ventilation, electrical safety, and energy efficiency now. Properties that already meet or exceed the new requirements will avoid costly last-minute scrambles.

Review Your Tenancy Agreements

Work with a solicitor or letting agent to ensure your tenancy agreements are ready for the new regime. Understand the revised Section 8 grounds thoroughly - particularly the mandatory grounds for sale and landlord occupation.

Price Fairly and Consistently

With rent tribunals gaining more power, setting rents at genuine market value from the outset becomes essential. Speculative above-market pricing that relies on tenant inertia is a strategy that's about to expire.

Consider a Hybrid Approach

Some London landlords are finding a middle ground: letting properties on assured tenancies for most of the year, while keeping one property in a portfolio available for short-term lets. This blends income stability with the upside of nightly rates - and keeps your options open.

So, Which Path Is Right for You?

There's no universal answer. The right strategy depends on your property location, portfolio size, risk appetite, tax position, and how hands-on you want to be.

If your property is in a high-demand tourist or business area and you can stay within the 90-night limit - or secure planning permission for year-round short-term letting - the numbers can be compelling. If you have a portfolio of suburban family homes with reliable long-term tenants, adapting to the Renters' Rights Act is likely the more sensible and profitable path.

What's not an option is doing nothing. The countdown to May 2026 is real, and landlords who act now will be in the strongest position - whichever direction they choose.

Need Help Making the Switch?

If you're a London landlord exploring short-term lets and want to understand what your property could realistically earn on Airbnb - without the operational headache - get in touch with the team at Airhosts. We manage everything from listing creation and pricing to guest services and compliance, so you can make the most of your property in a changing market. Let's talk strategy before May arrives.