The Renters' Rights Act 2026: What It Means for Your HMO Licence

The Renters' Rights Act came into force on 1 May 2026, and it is the most significant change to the private rented sector in a generation. For HMO landlords specifically, two changes matter far more than any other: the civil penalty for operating unlicensed has gone up, and the amount tenants can claw back has doubled.

The penalty increase

Before the Act, councils could impose a civil penalty of up to £30,000 for operating an unlicensed HMO. That ceiling has now risen to £40,000 per offence. Where a property has multiple simultaneous breaches — for example, unlicensed operation alongside overcrowding or fire safety failures — councils can and do impose separate penalties for each, meaning the real exposure for a non-compliant landlord is often a multiple of that headline figure.

Rent Repayment Orders doubled

This is the change we think landlords underestimate most. Previously, a tenant or council could apply to the First-tier Tribunal for a Rent Repayment Order covering up to 12 months of rent paid while a property was unlicensed. Under the Renters' Rights Act, that has doubled to 24 months, and the window during which a claim can be brought has also been extended from 12 to 24 months after the event.

In practice, this means an HMO with five tenants paying £700 a month each that operated unlicensed for two years could face an RRO claim well into six figures — on top of the separate civil penalty above.

Section 21 abolished

The Act also abolishes Section 21 "no-fault" evictions entirely. All assured shorthold tenancies become periodic tenancies with no fixed end date, and landlords must rely on specific statutory grounds to regain possession. This interacts directly with HMO management — licence conditions around tenant turnover, room reallocation, and management standards now need to account for tenancies that no longer have a natural expiry point.

What this means for your licence

None of this changes what an HMO licence application requires. It changes the cost of not having one. A licence application through us costs £300–£500+VAT. Operating without one now risks a £40,000 penalty and up to 24 months of Rent Repayment Order exposure, on a claim window that has also doubled.

If your property doesn't currently hold a valid licence — mandatory, additional, or selective — get in touch today. We will confirm exactly what your property needs and handle the entire application on your behalf.