Investing in the UK Living Sector? Here’s what the latest regulatory changes mean

We are seeing renewed deal momentum in the UK Living Sector. However, regulatory changes are refocusing investors, boards and lenders on how regulation-ready operators are, how well they can deliver, and where deal risk sits.

What we are seeing in the market now:

• Deal flow is rebuilding, with capital deploying selectively across large platforms and mid‑market transactions. Core and cross‑border investors are returning as pricing stabilises and financing costs ease — but only where execution risk is clearly understood and allocated.
• Purpose Built Student Accommodation (PBSA) remains attractive, with platform and portfolio transactions setting pricing reference points amid persistent undersupply and steady demand, but the general shortage of such accommodation means Co-living is gaining traction as a sub-sector.
• Build to Rent (BTR) is active, with single-family housing overtaking multifamily projects for the first time.
• Forward funding continues to unlock new supply, but programme risk, Gateway milestones and regulatory sequencing are now explicitly priced into funding terms.
• Foreign capital is providing liquidity for scalable, income‑led strategies, particularly where operating capability and pipeline are proven.
• Consolidation remains in focus as investors seek platform scale, operating leverage and access to projects in PBSA, BTR and senior living (the latter seeing changes to investment and return models in a bid to replicate the successful senior living market in the US).

What regulatory changes should investors watch, and how are they impacting investment and M&A in 2026?

The following live regulatory changes are impacting buyers’ diligence, how deals are priced, and where risk falls for transactions signing and closing through 2026. Where detail depends on secondary legislation, buyers are increasingly managing uncertainty through conditionality and risk sharing provisions rather than assuming outcomes.

Renters’ Rights Act: what changes for landlords and investors from May 2026?

From 1 May 2026, the Renters’ Rights Act 2025, abolished Section 21 “no‑fault” evictions and ended fixed‑term assured shorthold tenancies (ASTs). Most new residential tenancies in the private rented sector will instead become assured monthly periodic tenancies. PBSA will be out of scope for new tenancies where providers comply with a Government‑approved student‑housing code (the UNIPOL and ANUK codes). These will instead be common law tenancies. However, ASTs granted before 1 May 2026 to students will not convert to common law tenancies (these will convert to assured monthly periodic tenancies) even where the PBSA provider is a member of an approved code so care needs to be taken with the transitional provisions.

What this means for transactions:

• Buyers are reviewing tenancy data, arrears histories and PBSA code compliance at an operational level.
• Completion protection measures, including conditions precedent, escrows and post-completion undertakings are being utilised where exemption status is uncertain, and warranty and indemnity insurers are typically unwilling to cover future legislative-change risk. Broadly our expectation is that for sophisticated platforms and investors, the legislation will actually prove to fortify value as the market places even greater weight on operational competence and experience.

Fire safety: what do the new evacuation-plan rules require?

From 6 April 2026, the Fire Safety (Residential Evacuation Plans) (England) Regulations 2025 require the “responsible person” for high‑rise residential buildings to maintain a building emergency evacuation plan, implement arrangements for residents needing assistance, share specified information with fire and rescue authorities (with consent where required) and communicate clearly with residents.

What this means for transactions:

• We expect buyers to start looking at whether personal emergency evacuation plan (PEEP) arrangements, person-centred fire risk assessments and resident communications are operationally embedded and not just documented.
• Whilst standard regulatory warranties may catch some of the requirements, we expect to see an increase in specific warranties addressing the particular challenge of resident consent processes and outstanding enforcement correspondence with fire and rescue authorities.
• We may also see a rise in day-one readiness undertakings and conditions precedent for remedial works incorporated into transaction documents.

Second staircases and the Gateway regime: how do they affect new developments?

From 30 September 2026, new residential buildings with a top occupied storey at or above 18 metres require two staircases in England. A 30‑month transitional period allows schemes to proceed under the existing single-staircase rules where a building-control application has been submitted before 30 September 2026 and building work is "sufficiently progressed" by that date or by 30 March 2028. Higher‑risk buildings remain subject to the Building Safety Regulator Gateway regime.

What this means for transactions:

• We may see Gateway 2 approval (the building-control approval stage under the Building Safety Regulator regime) treated as a condition precedent for transactions involving higher-risk buildings, with forward-funding drawdowns staged against regulatory milestones and transitional status mapped directly onto long-stop mechanics.
• We anticipate that the two-staircase requirement may reduce the pipeline of developable schemes at 18m+ in the short term, creating scarcity value for compliant consented sites and shifting forward-funding capital towards sub-18m schemes.

Building Safety Levy: what will it cost and when does it apply?

The Building Safety Levy applies in England from 1 October 2026 to qualifying residential and PBSA developments above threshold levels. The levy is charged by reference to local‑authority rates and must be paid before the earlier of occupation or completion of the development. The building control authority can withhold the completion certificate if it is not paid.

What this means for transactions:

• We expect transaction documents to clarify who is treated as the "client" for levy purposes, supported by adjustment mechanisms, escrows and conditions precedent linked to levy submissions, and legacy development deals are being re-priced where viability appraisals pre-date the regime.
• Because applications submitted before 1 October 2026 are not caught by the levy but there is no extended transitional relief beyond that cut-off, this is expected to generate a surge of building control applications before 1 October 2026. This could create capacity bottlenecks at local authorities and the Building Safety Regulator.
• In share deals and development JVs, we also expect to see more bespoke allocation of levy cost and timing risk (including price chips or funding holdbacks) where the approval/commencement date could straddle 1 October 2026.

ECCTA identity verification: what do directors and investors need to know?

From 18 November 2025, identity verification (IDV) is mandatory for new directors and people with significant control (PSCs). Existing directors must provide their Companies House personal code with the next confirmation statement after 18 November 2025. Existing PSCs who are not directors must provide their code within the first 14 days of their birth month following commencement. PSCs who are also directors must provide it with the confirmation statement and, separately, in respect of their position as PSC, in each case respecting the time limits noted above.

Companies no longer need to keep local registers of directors, directors’ residential addresses, secretaries or PSCs. This information is now held centrally at Companies House.

What this means for transactions:

• Buyer-nominated directors must have completed IDV and obtained their Companies House personal code before they can lawfully act on appointment at completion. We recommend completing IDV well ahead of exchange and completion, so that any issues can be resolved. International directors may face extra steps as the documents accepted for direct verification are limited. They will often need to complete verification through an Authorised Corporate Services Provider (ACSP) at extra cost and with additional planning.
• IDV compliance of the target's existing directors and PSCs has become a new area of buyer due diligence, as failure to comply is a criminal offence.

Here to support your strategic goals

We help our clients turn regulatory change into deal advantage. If you are planning an acquisition, investment or a forward funding, please get in touch.