The private rented sector in England has gone through more legislative change in the last two years than in the previous decade. Landlords relying on practices that were standard in 2022 may find themselves exposed to significant financial penalties or unable to recover possession of their properties. Understanding the current framework around deposit protection and the trajectory of Section 21 is no longer optional — it is a basic requirement of operating lawfully.
What Is an Assured Shorthold Tenancy?
An Assured Shorthold Tenancy is the default tenancy type for most private residential lettings in England. Governed primarily by the Housing Act 1988 as amended, an AST gives tenants a degree of security while preserving the landlord's right to recover possession through prescribed legal routes. The vast majority of periodic tenancies and fixed-term lets running six months or longer will automatically fall within the AST regime unless specific conditions exclude them — for example, where the annual rent exceeds the statutory threshold or where the landlord is resident on the same premises.
Deposit Protection: The Three Schemes and the Penalty Framework
Every deposit taken under an AST must be protected within 30 calendar days of receipt. The three government-approved schemes — the Deposit Protection Service, MyDeposits, and the Tenancy Deposit Scheme — each operate either as custodial schemes (where the scheme holds the money) or insurance-backed schemes (where the landlord retains the funds but pays a premium). Failure to protect the deposit within the 30-day window, or failure to provide the prescribed information to the tenant, exposes the landlord to a court order requiring repayment of the deposit plus a penalty of between one and three times the deposit amount.
The prescribed information requirement is frequently underestimated. Landlords must serve a specific document setting out which scheme holds the deposit, how disputes are resolved, and what the tenant's rights are. Serving this information late — even a day after the 30-day window — carries the same penalty exposure as failing to protect at all. Courts have consistently declined to exercise discretion in favour of landlords who miss the deadline, even where the failure was administrative rather than deliberate.
Changes to Deposit Rules in 2024 and 2025
The Tenant Fees Act 2019 had already capped deposits at five weeks' rent for annual rents below a set threshold, and six weeks' rent above it. No further cap changes have been introduced in the 2024–2025 period, but enforcement activity has increased considerably. Local authorities have been granted expanded powers to investigate complaints, and some have issued civil penalty notices to landlords who repeatedly fail to comply with deposit protection obligations. Landlords managing multiple properties through agents should verify that each agent is using a compliant scheme and that prescribed information is being served correctly on every new tenancy.
One practical point often overlooked: when a fixed-term AST rolls over into a statutory periodic tenancy, the original deposit protection remains valid. The landlord does not need to re-protect the deposit or re-serve prescribed information merely because the tenancy type has changed. The obligation to re-protect arises only when a new deposit is taken — for example, when the tenancy is renegotiated on entirely new terms.
Section 21: The Current Position
Section 21 of the Housing Act 1988 has long allowed landlords to recover possession without establishing a ground for eviction, provided correct procedural steps are followed. The Renters (Reform) Bill, which passed into law as the Renters' Rights Act, abolishes Section 21 for new tenancies. The commencement date for existing tenancies has been the subject of considerable political and legal debate, and landlords should seek current legal advice on whether any transitional provisions apply to their specific circumstances.
Even before abolition takes full effect, Section 21 is hedged by multiple preconditions. A valid Section 21 notice cannot be served where the landlord has failed to protect the deposit, has failed to serve prescribed information, has not provided the tenant with a valid gas safety certificate at the start of the tenancy, has not given the tenant the current government-issued How to Rent guide, or has failed to provide an Energy Performance Certificate. Any one of these failures renders the notice invalid and requires the landlord to remedy the defect before serving a fresh notice.
Section 8 Grounds: The Route Forward
With Section 21 being phased out, landlords are increasingly reliant on Section 8 grounds under Schedule 2 of the Housing Act 1988. Ground 8 — mandatory possession where the tenant owes at least two months' rent at both the date of the notice and the date of the hearing — remains the most commonly used mandatory ground. Grounds 10 and 11 provide discretionary routes for lesser rent arrears and persistent late payment respectively.
The Renters' Rights Act has introduced expanded mandatory grounds in certain categories, including where a landlord genuinely intends to sell or move into the property. The notice periods and restrictions on when these new grounds can be used in the first months of a tenancy are more prescriptive than the old Section 21 framework, and landlords need to document their intentions carefully to withstand any challenge at the possession hearing.
Practical Drafting Considerations for Landlords
A well-drafted AST should address not only the core financial terms — rent amount, payment date, deposit figure — but also clarity on permitted use, alteration restrictions, subletting prohibitions, and the procedure for reporting disrepair. Ambiguous clauses on any of these points tend to generate disputes that take disproportionate time and cost to resolve. Landlords and letting agents using template agreements should verify that those templates reflect the current regulatory position on deposit caps and prescribed information requirements.
Forms Legal provides an Assured Shorthold Tenancy Agreement template that incorporates current deposit protection requirements and can be adapted to the specific terms of any residential letting in England.
What Landlords Should Do Before the Next Letting
Conduct a compliance audit before each new tenancy begins. Confirm the deposit protection scheme is active, the prescribed information pack is ready to serve, gas and electrical certificates are current, the EPC is at least grade E (with proposed future changes to grade C under consultation), and the How to Rent guide downloaded from GOV.UK is the most recent version. Keeping a signed receipt from the tenant for each of these documents will be essential if possession proceedings become necessary.
The private rented sector in 2026 rewards landlords who treat compliance as an operational priority rather than an afterthought. The penalty exposure for deposit failures, the invalidation of possession notices, and the prospect of further regulatory change all point in the same direction: get the paperwork right at the outset, and keep records that prove it.
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