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The Renter’s Rights Act 2025 introduces some big changes to private rental legislation, including some that have significant implications for the rebuild costs of your properties.
Could this private rental sector overhaul leave your property portfolio underinsured? Potentially, yes. Read on for more details.
What is the Renter’s Rights Act 2025?
The Renter’s Rights Act 2025 is landmark legislation in the UK, often described as the most significant shake-up of the private rented sector in decades. It received Royal Assent in October 2025 and aims to rebalance the relationship between landlords and tenants, providing greater security and stability for renters.
The act primarily deals with the abolition of “no-fault” evictions and fixed-term tenancies, but, importantly, it also amends the Decent Homes Standards, which is where underinsurance risk enters the equation.
What is the Decent Homes Standard?
The Decent Homes Standard (DHS) is a minimum technical quality standard for housing. Until the Renter’s Rights Act 2025, the standard was mandatory only for the social rented sector. The Act extends this legal requirement to the private rented sector (PRS).
A home is deemed ‘decent’ if it meets four core criteria:
- It meets the current statutory minimum standard for housing. This means the property must be free of the most serious health and safety hazards, known as Category 1 hazards, as assessed under the Housing Health and Safety Rating System (HHSRS). Examples include structural collapse risk and fire risks.
- It is in a reasonable state of repair. Currently, this is defined by the age and condition of ‘key building components’ (like the roof or boiler) and ‘other building components’ (like kitchens and bathrooms). A property fails if a key component is both old and in poor condition, or if two or more other components are in the same state.
- It has reasonably modern facilities and services. This means having an adequate kitchen (not older than 20 years), a modern bathroom (not older than 30 years), and an appropriately located WC.
- It provides a reasonable degree of thermal comfort. This requires the property to have both effective insulation and efficient heating to prevent excess cold.
- Related – EPC requirements for UK landlords in 2025 – and underinsurance risk
- Related – Green upgrades and underinsurance: What UK property owners need to know
The key DHS amendment in the Renter’s Rights Act 2025
While the core principles remain, the Renter’s Rights Act 2025 introduces a crucial amendment to the DHS by placing a much greater focus on the actual condition of the property, particularly regarding damp and mould, over prescriptive age limits.
This shift, based on the principles of Awaab’s Law, mandates that landlords must not only ensure their properties meet the standard but also adhere to strict, legal timescales for investigating and remediating serious health hazards.
It is this requirement to undertake more extensive, non-optional, and time-bound repair and improvement works to meet these elevated standards, especially in cases of major structural failure or persistent damp, that introduces underinsurance risk for landlords.
Underinsurance risk of the RRA 2025 and DHS – explained
The connection between the Renter’s Rights Act 2025, the strengthened Decent Homes Standard, and the risk of underinsurance for landlords is that remediation works are now mandatory and must be completed to a higher, more expensive standard.
Rebuild costs and the price of modern remediation
The rebuild cost of a building is the sum required to completely rebuild the structure from scratch should it become damaged beyond repair. This figure is traditionally based on the cost of rebuilding to the minimum standards (like basic Building Regulations) that existed when the property was first insured or valued.
However, the RRA 2025 changes what’s considered the minimum standard for rental properties. Where a building has latent defects, such as persistent damp or poor insulation, the DHS now requires a landlord to undertake more extensive and often structural remedial works.
These mandatory enhancements significantly increase the actual cost of rebuilding compared to the original, lower-standard rebuild cost listed on the existing policy.
Related – Building Safety Levy – Will your insurance cover it?
The underinsurance shortfall of DHS work
If a property suffers catastrophic damage and is underinsured, the landlord faces a significant shortfall:
- Policy Value (A): The maximum sum the insurance company pays out, based on your original rebuild cost estimate.
- Actual Rebuild Cost (B): The real cost to rebuild the property to current building standards plus the mandatory Decent Homes Standard requirements.
If Value B is greater than Value A, the property is underinsured.
Furthermore, most insurance policies contain an Average Clause that can further diminish your payout if you’re underinsured. Learn more in our guide – Don’t be caught out by the “Average Clause” in insurance.
This shortfall for bringing the property back to a lettable, DHS-compliant standard will have to be covered entirely out of the landlord’s own pocket, turning a disaster claim into a major financial liability.
Protect your portfolio – Book a professional Reinstatement Cost Assessment
The only way to accurately determine your true exposure and ensure your insurance policy fully covers the cost of rebuilding to the DHS-compliant standard is to commission a Building Reinstatement Cost Assessment.
Our RICS-regulated RCAs provide a reliable, up-to-date rebuild valuation of your properties, so you can adjust your coverage and protect against underinsurance. With a nationwide network of experienced assessors, we can accurately assess any property anywhere in the UK. Inquire today.
If you’re planning remedial works on one or more of your properties, don’t wait until a major claim exposes your shortfall. Contact Cardinus Risk Management today.
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