Stamp Duty Land Tax and the Renters’ Rights Act: Will Renters have to pay Tax on Rent?

April 17, 2026

From 1 May 2026, the Renters’ Rights Act (“RRA”) will take effect, marking the most significant overhaul of private renting in a generation. Headlines have focused on the abolition of “no fault” evictions, mandatory notice reforms and the wider shift towards tenant security.

However, an overlooked and potentially costly issue has emerged: whether the shift from fixed‑term ASTs to rolling periodic tenancies may expose renters to unexpected Stamp Duty Land Tax (SDLT) liabilities.

This article explains the emerging SDLT risk, what changes under the RRA trigger it and the steps tenants and landlords should now be considering.

The Current Position: Why ASTs Rarely Trigger SDLT

Under the existing regime, Assured Shorthold Tenancies (ASTs) are typically granted for 12–24 months. For SDLT, what matters is the “net present value” (NPV) of rent payable over the fixed term. Most ASTs fall well below the £125,000 NPV threshold at which SDLT liability starts.

Because each AST is treated as a separate lease, the NPV resets with each renewal. Rent previously paid under an earlier term does not accumulate. As a result, SDLT almost never bites in ordinary residential ASTs.

The RRA Change: Why Rolling Tenancies Could Trigger SDLT

The Renters’ Rights Act fundamentally restructures residential lettings. From 1 May 2026, almost all existing ASTs will automatically convert into rolling periodic assured tenancies. Fixed terms, renewal cycles, expiry dates and contractual break clauses fall away.

This shift has a material tax consequence.

1. No more “reset” of the SDLT clock

Under a rolling periodic tenancy, the tenant is treated as holding a single, ongoing lease, rather than a sequence of independent fixed‑term leases. As time passes, the NPV of rent is effectively calculated across the entire duration of occupation, rather than in isolated 12‑month blocks.

For long‑term renters – especially in higher‑rent regions such as London and the South East the cumulative NPV may be able to surpass the £125,000 threshold, potentially triggering SDLT where none was payable before.

2. HMRC’s Existing Guidance Intensifies the Issue

Under HMRC’s SDLT Manual, where a fixed‑term lease continues beyond the original term, legislation requires an additional year of rent to be added to the NPV. This applies automatically when an AST rolls into statutory periodic occupation.

When that same AST converts into a fully open‑ended periodic tenancy under the RRA, the NPV increases again – sometimes significantly. The combined effect means many renters may find themselves unexpectedly caught by SDLT for the first time, even if their original tenancy was low‑risk.

Rent Increases and Rolling Tenancies: Wider RRA Context

The new SDLT exposure arises alongside two major structural reforms under the RRA:

Rolling Tenancies

All ASTs – new and existing – become periodic from day one of the new regime. Tenancies no longer have end dates and continue indefinitely until:

  1. the tenant gives notice, or
  2. the landlord establishes a statutory ground for possession.

This creates a continuous lease structure, making SDLT calculations materially different from the historic fixed‑term model.

The RRA also restricts rent increases to once every 12 months, exclusively via a Section 13 notice with two months’ notice. Rent review clauses are rendered ineffective, and no increase may occur in the first year of the tenancy.

SDLT Penalties: A Growing Compliance Risk

If renters become liable for SDLT but fail to submit a return within 14 days, they may face:

  • £100 penalty (up to 3 months late)
  • £200 penalty (after 3 months)
  • Up to 100% of SDLT due (after 12 months)
  • Daily interest on all unpaid amounts

Appealing penalties is difficult, and interest charges cannot be appealed at all. Many renters will be unaware of their new obligations – placing them at risk of future compliance action.

How Herrington Carmichael Can Help

Herrington Carmichael is uniquely positioned to assist landlords and tenants navigating the SDLT implications and the wider effects of the RRA.

Our Real Estate Team advises on new leases, renewals and forfeiture.

Our Dispute Resolution Team advises on RRA compliance, possession strategy, and the legal risks arising from the new tenancy model.

Where complex tax issues arise, we work alongside trusted chartered tax advisers to provide fully integrated advice, please contact us.

Daniel Leitao
Solicitor, Dispute Resolution
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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