The first phase of the Renters’ Rights Act 2025 came into force on 1 May 2026 — and with it arrived the most significant reform to the private rented sector in England since the Housing Act 1988. For landlords across Sussex and beyond, the headline change — the abolition of Section 21 ‘no-fault’ evictions — has rightly dominated the conversation. But there is a quieter, equally important question that many landlords have not yet asked: what does the Renters’ Rights Act mean for my insurance? The answer is more significant than most landlords expect. The Act does not simply change tenancy law. It changes the financial risk profile of owning a residential investment property in a way that makes several elements of landlord insurance substantially more important than they were before.

What has changed under the Renters’ Rights Act 2025?

From 1 May 2026, all assured shorthold tenancies in England have automatically converted to open-ended periodic tenancies. Fixed terms no longer exist.  Tenants can leave at any time on two months’ notice. Landlords, by contrast, can only end a tenancy by relying on one of the statutory grounds set out in Section 8 of the Act — and those grounds have been modified in ways that matter considerably to landlords dealing with rent arrears. The most important change for  Insurance purposes concerns Ground 8, the rent arrears ground. To serve a valid notice under the new regime, a tenant must owe at least three months’ rent — up from the previous two months — and that level of arrears must be maintained both at the date the notice is served and at the date of the court hearing. If a tenant makes a partial payment before the hearing date that brings the arrears below three months, the court cannot order possession. The landlord must start the process again. This is not a theoretical risk. It creates a very real scenario in which a landlord can find themselves in possession proceedings for six, eight or even twelve months while a tenant makes occasional small payments to frustrate the process. During that entire period, the landlord’s rental income may be significantly reduced or absent entirely.

The abolition of Section 21 means landlords can no longer use the ‘no-fault’ route as a backstop. With possession proceedings now requiring three months’ arrears maintained throughout, the financial exposure from a single defaulting tenancy has increased materially.

Why rent guarantee insurance has become essential for landlords

Before the Renters’ Rights Act, many landlords took the view that the Section 21 route provided an adequate backstop. If a tenant fell significantly into arrears, you served a Section 21 notice and recovered the property within a couple of months. The financial exposure, while unpleasant, was limited. That backstop no longer exists. With possession proceedings now requiring a demonstrated and sustained period of significant arrears, followed by a court process that could stretch considerably further than it did previously, the financial exposure from a single defaulting tenancy is materially greater than it was before May 2026. Rent guarantee insurance — sometimes called rent protection insurance or tenant default insurance — covers the rental income a landlord loses when a tenant stops paying rent. Most policies begin paying out after an initial period of arrears, typically one month, and continue for a specified period, commonly up to twelve months, while the situation is resolved or while possession proceedings are underway. Many policies also include legal expenses cover for the cost of those proceedings themselves. For a landlord with a single investment property, one month of unpaid rent was manageable. A period of six to twelve months of absent income, combined with the legal costs of extended possession proceedings, is a very different proposition. For a portfolio landlord with multiple properties, the cumulative risk of even two or three simultaneous arrears situations is significant.

Legal expenses cover: the element most landlords are missing

The shift from Section 21 to Section 8 possession has significantly increased both the complexity and the cost of recovering a tenanted property. A Section 21 process, while not without cost, was relatively straightforward. A contested Section 8 possession claim, particularly where a tenant makes partial payments to frustrate the process or disputes the grounds, can require multiple court hearings, specialist legal representation and months of ongoing legal management. Legal expenses insurance covers the cost of legal representation in landlord and tenant disputes, possession proceedings, rent recovery actions and related matters. Many landlord insurance policies include a legal expenses element as standard, but the limits and the scope of cover vary considerably between policies. Landlords should check specifically that their legal expenses cover extends to possession proceedings under the new Section 8 grounds, and that the policy limit is sufficient to cover extended proceedings. For portfolio landlords managing multiple properties, standalone legal expenses insurance arranged across the whole

portfolio is often the most cost-effective and comprehensive approach.

Property owners liability: an increased risk under the new regime

The Renters’ Rights Act also introduces stronger enforcement of property standards and gives tenants greater rights to challenge the condition of their  accommodation. This creates an increased risk of liability claims arising from property defects, damp and mould, and other maintenance issues. The Act introduces Awaab’s Law provisions into the private rented sector, imposing legally binding timeframes on landlords to investigate and remedy serious hazards.

Property owners’ liability insurance covers claims made against the landlord by tenants, visitors or others for injury or property damage arising from the condition of the property. Landlords should review their liability limits in light of the strengthened property standards regime the Act introduces, particularly where older properties are involved or where there are known maintenance issues.

What portfolio landlords in Sussex should do right now

The Renters’ Rights Act is not a change that can be noted and reviewed at the next renewal. For landlords with multiple properties, the cumulative implications of the Act represent a genuine and material change in the risk profile of the portfolio that warrants an immediate insurance review. Haxon recommends that all portfolio landlords take the following steps as a matter of priority:

Confirm that rent guarantee insurance is in place across all tenancies and that the policy limits and cover periods are appropriate for the extended possession timeline the Act now creates.

Check that legal expenses cover is included in your landlord insurance programme and that it specifically covers possession proceedings under the new Section 8 grounds, with limits sufficient for extended proceedings.

Review your property owners’ liability limits in light of the Act’s strengthened property standards requirements, particularly for older properties.

Consider whether your existing insurance programme, if spread across multiple policies and multiple insurers would benefit from consolidation into a coherent portfolio arrangement managed by a specialist broker.

Ensure that any new tenancy agreements entered into after 1 May 2026 are on the correct periodic basis and that all required documentation, including the Government’s Renters’ Rights Act Information Sheet, has been provided to tenants.

Frequently asked questions

Does rent guarantee insurance cover the new extended arrears period under Section 8?

Most modern rent guarantee policies are designed to cover rental income throughout the possession process, not just for a fixed initial period. However, the exact terms vary between policies. Haxon reviews the specific terms of any rent guarantee policy against your tenancy profile to ensure the cover period is appropriate given the extended timeline that possession proceedings can now involve.

Will my existing landlord insurance still be valid under the Renters’ Rights Act?

Your existing policy will remain valid, but it may not be adequate for the changed risk profile the Act creates. The key areas to review are whether rent guarantee cover is in place, whether legal expenses cover extends to Section 8 proceedings, and whether your property owners’ liability limits are appropriate for the  strengthened maintenance standards the Act introduces.

Do I need rent guarantee insurance if my tenants have always paid on time?

A tenant’s payment history is not a reliable predictor of future default. Financial circumstances change — redundancy, relationship breakdown, ill health — and even tenants with excellent track records can fall into arrears. The risk of not having rent guarantee insurance in place is that a single tenant default, combined with extended possession proceedings under the new regime, could result in twelve months or more of absent income with limited recourse.

How has the Renters’ Rights Act affected rent guarantee insurance premiums?

The abolition of Section 21 has increased the risk profile of rent guarantee insurance, and premiums in this market are expected to rise as the implications of the Act work through the claims environment. Landlords who arrange rent guarantee cover now, before premium increases take full effect, are likely to secure more  favourable terms than those who wait.

Haxon arranges landlord insurance, rent guarantee cover and legal expenses protection for portfolio landlords across Sussex. If you would like a review of your current arrangements in light of the Renters’ Rights Act, we would welcome the conversation.