In the months leading up to the Renters’ Rights Act coming into force on 1 May, and even more so since then, we have had a steady stream of conversations with landlords who are thinking about selling.
Some are looking at a planned exit whilst some are restructuring. Everyone is feeling the pressure from mortgage rates, tax, utilities, licensing, compliance, repairs, management costs or simply a change in personal circumstances. Others have reached the point where they no longer feel the private rented sector works for them in the way it once did.
Whatever the reason, selling a rental property is no longer just a case of serving notice, waiting for the tenant to leave and putting the property on the market.
The legal landscape, market and buyer behaviour has changed. Landlords need to be realistic about all three.
There is still a route to sell, but it is not Section 21
For landlords taking new action from 1 May, Section 21 is no longer available as the default “no fault” route to recover possession. If a landlord genuinely intends to sell, the main route is now Ground 1A. If the landlord or a qualifying family member genuinely intends to move into the property, the route is usually Ground 1. Both are mandatory grounds, but that does not mean possession is automatic. The landlord still has to serve the correct notice, wait the correct period, issue a claim if the tenant does not leave, and prove the ground if challenged. Government guidance confirms that Ground 1 and Ground 1A require four months’ notice and cannot be used to require a tenant to leave within the first 12 months of a new tenancy.
This is where landlords need to be careful. Ground 1A is not a new version of Section 21. It is not there to “test the water” or create vacant possession just in case a sale might work. It is there for landlords who genuinely intend to sell.
The same applies to Ground 1. It is for genuine occupation by the landlord or a qualifying family member. It is not a fallback ground and it will usually be of no practical use to a limited company landlord.
The market will not care what a landlord needs
This is the harder part of the conversation, but it needs saying.
A landlord may need a certain figure to repay a mortgage, clear bridging finance, recover refurbishment costs, settle debt, fund retirement or maintain a lifestyle. That may be completely understandable. But the market does not value a property based on what the owner needs.
The market only cares what a buyer is willing and able to pay.
That gap between “what I need” and “what the market will pay” is where a lot of difficult decisions are being made.
Birmingham remains a strong rental city, but that does not mean every rental property is easy to sell. ONS data shows the provisional average Birmingham house price was £232,000 in February 2026, broadly flat year-on-year, with only a 0.7% increase from the revised February 2025 figure of £231,000. More importantly for many landlords, flats and maisonettes moved in the wrong direction, with average flat prices down 2.4% over the year, while semi-detached homes rose 1.8%.
Birmingham’s rental picture is more nuanced than the headline figures suggest. ONS data shows average private rent across Birmingham at £1,086 in March 2026, up 3.5% year-on-year, which tells us that the wider stock of rented homes is still more expensive than a year ago. However, more live market indicators point to a cooling market for new lets. Zoopla reported Birmingham new-let rents down 0.7% year-on-year, one of only two named cities in its March 2026 release where rents had fallen, while SpareRoom previously reported Birmingham room rents down 4% year-on-year. In practice, this means landlords should be careful about relying on historic rent growth when pricing a sale. Existing rents may still be higher than last year, but new-let pricing, room rents and tenant affordability are showing clear signs of pressure.
That is the uncomfortable contradiction many landlords are facing. The property may still let. The rent may still look good on paper. But the sales market may not be prepared to pay the price the landlord has in mind.
City-centre flats are a good example. At the time of writing, Rightmove showed over 1,400 properties for sale in Birmingham City Centre and more than 2,400 flats for sale across Birmingham. Those figures change daily, but they illustrate the level of choice buyers currently have. When buyers have that much choice, they become more selective on price, lease length, service charge, ground rent, cladding position, EPC rating, mortgageability and yield.
Why so much supply?
To oversimplify, property markets move in cycles. When finance is cheaper and confidence is high, developers commit to multi-year building programmes. Land is acquired, planning is secured, funding is arranged, and apartment blocks are built over several years. Many units are sold off-plan before the wider market has fully shifted.
By the time those schemes complete, the market can look very different. Interest rates may be higher. Investor appetite may have weakened. Mortgage affordability may be tighter. Service charges may have increased. Buyers may have more choice. What looked attractive on a spreadsheet three or four years earlier can become harder to sell in the finished market.
That does not mean city-centre flats have no value. They clearly do. But in a market with high visible supply, buyers are unlikely to pay a premium simply because a landlord needs a particular figure. They will compare options, price in risk, and negotiate accordingly.
For some owners, that means accepting a lower price than expected. For others, it may mean holding longer, improving the property, resolving compliance issues, or waiting for a better sales window.
The rental market is under pressure too
The Reposit Renting Under Pressure report paints a useful picture of what is happening on the lettings side. Their data shows rental supply improved during 2025, with new rental instructions up around 9%, lets agreed up 6% and lets up 4%. At the same time, average monthly rent increased from £822 in 2021 to £1,134 by the end of 2025, a rise of around 38%. But the rate of growth has slowed sharply, from 21% in 2022 to just 1.4% between 2024 and 2025.
This is important because investor buyers are now looking more closely at whether the rent is sustainable. They are not just buying a house or flat. They are buying the income, the compliance history, the tenant profile, the condition, the paperwork and the future risk.
The same report found that 53% of tenants are spending 40% or more of their take-home pay on rent, and 51% believe renting will become less affordable over the next 12 months. It also found that average arrears in 2025 stood at £1,980, which is still 54% higher than in 2021 and higher than the average cash deposit of £1,307.
This is why landlords and buyers are becoming more cautious.
For a buyer looking at a small HMO or city-centre flat, the question is no longer just, “what is the rent?”.
It is, “what is the real risk-adjusted return?”.
Small HMOs are not immune
Small HMOs can still be good investments, but the buyer pool is narrower than for standard family homes. A family buyer may look at a property emotionally. An investor does not and will usually work backwards from the numbers.
They will want to know whether the licence is correct, whether the room sizes are compliant, whether fire safety documents are in place, whether the management records are clean, whether deposits and prescribed documents have been handled properly, whether there are arrears, whether tenants are likely to stay, and what capital expenditure is waiting for them after completion.
If the answer is unclear, they will price in the risk.
That is why some landlords are being surprised by the offers they receive. The headline rent may look strong, but buyers are deducting for compliance risk, refurbishment, interest rates, voids, professional management and the possibility that possession may take longer under the new rules.
In some cases, landlords who want or need to sell now may have to accept a lower price than expected. In a few cases, they may be looking at a significant loss.
That does not mean selling is the wrong decision. It means the decision needs to be made with clarity and you need to ask yourself, do I really need to exit now?
Ground 1A: selling the property
Ground 1A is the main route where a private landlord intends to sell.
The notice period is normally four months. Notice can be served during the first 12 months of a new tenancy, but it cannot expire before that 12-month protected period has ended. There is also an important exception for older assured non-shorthold tenancies created before 1 May 2026, where Ground 1A may not be available.
In practice, landlords should keep evidence from the beginning. That may include valuations, agent appraisals, solicitor instructions, mortgage redemption figures, board minutes for company landlords, correspondence with selling agents and evidence of preparation for sale.
A vague intention is not enough. “I might sell if I get the right price” is not the same as “I intend to sell.”
Ground 1: moving back in
Ground 1 applies where the landlord, or a qualifying close family member, requires the property as their only or principal home. Legal guidance lists the qualifying people as including the landlord, spouse, civil partner or cohabitee, parent, grandparent, sibling, child or grandchild, including certain family members of a spouse, civil partner or cohabitee. The minimum notice period is four months.
This ground needs to be approached carefully, especially where ownership is through a limited company. A company cannot live in a property and does not have family members in the normal sense, so Ground 1 will usually not work for a company-owned property.
Use the right form
For private rented assured tenancies, landlords now use Form 3A for a Section 8 notice. GOV.UK says landlords must use Form 3A for privately rented assured tenancies and should use the prescribed forms to ensure the notice is valid. The guidance also warns against changing the wording unless the form allows it.
Avoid old templates, informal letters or copied wording from the internet.
The wrong form, wrong date, wrong ground, weak explanation or poor service evidence can delay the process and may mean starting again.
The restricted period is the part many landlords miss
This is the point that can cause real problems.
If a landlord serves notice using Ground 1 or Ground 1A, they cannot simply re-let or market the property for rent if the sale does not work out. This is described as the restricted period. It starts when the Section 8 notice is served and ends 12 months after the end of the Section 8 notice. Because the notice period is usually four months, the restriction will often last at least 16 months from the date the notice is served.
During that period, the landlord must not grant a new residential tenancy, allow occupation under a paid licence, or market the property for letting. Marketing includes advertising the property or telling someone, in the course of letting agency work, that it is or may be available.
This does not stop a genuine sale. It stops a landlord using the selling or moving-in ground to recover possession and then quickly putting the property back on the rental market.
That is why the sale strategy needs to be thought through before notice is served.
The penalties are not theoretical
Misusing these grounds can lead to serious consequences.
A landlord may face a financial penalty where they rely on a ground they do not reasonably believe they can use and the tenant leaves without a possession order. More serious breaches, including re-letting or marketing during the restricted period, can amount to an offence, with fines of up to £40,000. Rent repayment orders may be available for certain breaches connected with Ground 1 or Ground 1A.
These grounds need to be used properly or not at all.
Social Housing Provider - the panacea to all your woes?
We would also caution against jumping straight into handing a property over to a social housing provider without completing proper due diligence and understanding the risks in that market.
There is a growing temptation for landlords to see social housing, supported housing, exempt accommodation or council-backed leasing schemes as a simple way to become “hands off”. In some cases, those arrangements can work well. A good provider, with strong governance, proper funding, clear repair obligations and experienced housing management, can offer landlords a stable long-term arrangement.
But not every provider is the same, and not every lease transfers the risk in the way landlords assume.
The first question is always: who exactly are you contracting with? A private company, charity, CIC, managing agent, local authority, registered provider, or supported housing operator are not all the same thing. The second question is: what legal structure is actually being used? Is it a genuine lease? A management agreement? A rent-to-rent model? A licence arrangement? A supported accommodation scheme? The answer matters, because it affects possession, repairs, licensing, insurance, mortgage consent, planning use, HMO status, tenant rights and who is legally responsible when something goes wrong.
Landlords should also be careful not to assume that social housing sits completely outside the Renters’ Rights Act. The government has confirmed that the Act is being applied to the private rented sector from 1 May 2026, while most assured tenancies of social housing provided by private registered providers will move to the new framework from October 2027. However, the 1 May 2026 changes can still apply to non-social-housing assured tenancies offered by private registered providers, and to assured tenancies of social housing where the landlord is not a private registered provider. In other words, the label “social housing” is too broad. The landlord, tenancy type and structure all need to be checked.
There is also a myth that once a landlord hands the property to a provider, all legal duties disappear. Well-drafted lease may transfer day-to-day management, repairs and tenant-facing obligations to the provider, but it does not automatically remove every legal, financial or reputational risk from the property owner. The owner may still have obligations under their mortgage, superior lease, insurance, planning position, HMO licence, fire safety arrangements, building condition, and the terms of the lease with the provider.
Supported housing is also becoming more regulated. The government’s response to the Supported Housing regulation consultation states that the Supported Housing (Regulatory Oversight) Act 2023 is intended to tackle rogue providers, improve standards, and introduce a licensing regime, national supported housing standards, and related Housing Benefit changes. That should tell landlords something important: this is not a risk-free market and is a sector under scrutiny.
Before entering into any arrangement, landlords should check the provider’s financial strength, registration status, track record, complaints history, repair process, safeguarding approach, insurance, funding model, local authority relationship, rent payment history, and ability to return the property with vacant possession at the end. They should also take advice on the lease itself, including break clauses, repair liability, inspection rights, damage, voids, indemnities, utilities, council tax, licensing, planning, subletting, and what happens if the provider fails.
A social housing lease may be the right option for some landlords. But it should be treated as a commercial transaction requiring due diligence, not as a shortcut out of responsibility.
Our view
There is no perfect time to sell. Waiting can bring risk. Selling now can bring risk. Holding a property that no longer works financially can also bring risk. The right answer will depend on the property, the tenancy, the mortgage, the ownership structure, the landlord’s tax position and the reason for selling.
But we would strongly caution against serving notice first and working out the plan later.
We would also caution against jumping straight into handing over a property to a social housing provider without completing comprehensive due diligence and understanding the risks in that market.
Before taking action, landlords should ask themselves:
- Is the intention to sell genuine?
- Is the expected sale price realistic in today’s market?
- Can the property be sold with the tenant in situ?
- Would another investor buy it?
- Are the compliance records strong enough for due diligence?
- Can I afford the restricted period if the sale falls through?
- Have I taken tax, mortgage and legal advice?
- Would a negotiated surrender be better than a contested possession route?
- Is this a forced sale, or is there time to improve the property and paperwork first?
Final word
The market does not owe any landlord a particular price.
That may sound blunt, but it is the reality. A buyer will not pay more because a landlord needs to clear a mortgage, recover refurbishment costs or fund the next stage of life. They will pay what they believe the property is worth to them, in the current market, with the current risks attached.
For some landlords, selling will still be the right decision. For others, the better option may be to hold, refinance, improve the property, tidy up compliance, sell with tenants in situ, or wait for a more suitable window.
What landlords should not do is treat Ground 1A as the new Section 21, doing so would be a big mistake.
If you are thinking about selling, moving back into a property, restructuring your portfolio or serving notice for any reason, please speak to Sentinel before taking action. Whilst we cannot give legal or tax advice, we can help you think in the right direction and take the necessary professional advice you need. A short conversation at the beginning can prevent a very expensive problem later.
Quoc and Tu
Sentinel - "Doing things right"
Disclaimer: This newsletter is for general information only and does not constitute legal, financial or other professional advice. No representation or warranty is given as to its accuracy or completeness and, to the fullest extent permitted by law, Sentinel accepts no liability for any loss arising from reliance on it, including any errors or omissions.