This informal CPD article ‘Two Acts, One Pressure Point - What 2026 Looks Like for SMEs With Property Exposure‘ was provided by Stefan Gauci Scicluna, Founder and Managing Director of Auren Institute, who are focused on practitioner compliance training for SMEs and mid-market employers in the UK and Malta.
What you will learn from this article
By the time you finish reading, you will be able to:
- Map the 2026 to 2027 commencement calendar of both the Renters' Rights Act 2025 (c. 26) and the Employment Rights Act 2025 (c. 36).
- Identify the five practical points where the two Acts collide for owner-managed SMEs with property exposure.
- Explain why Ground 5C (employment-linked tenancy) sits at the literal intersection of employment and housing law.
- Recognise the new "all reasonable steps" standard for third-party harassment and what it asks of small employers.
- Apply a calendar-based compliance approach to your own organisation.
For owner-managed businesses in the UK with property on the books, 2026 is the year two long-trailed pieces of legislation stop being talked about and start being enforced. The Renters' Rights Act 2025 (c. 26), which received Royal Assent on 27 October 2025, brought all tenancies under its new regime on 1 May 2026 [1][5]. The Employment Rights Act 2025 (c. 36), Royal Assent on 18 December 2025, started its phased commencement on 6 April 2026, with another significant tranche due in October 2026 and a third on 1 January 2027 [2][3][4].
Each Act, taken alone, would be a serious year of work for an HR or Compliance lead at a mid-sized employer. Taken together, on the small minority of UK SMEs that are both employers and landlords, they create a compliance load that is genuinely new in shape.
This piece is for those businesses. The owner-manager with twenty staff and a portfolio of buy-to-lets. The family firm running an HMO or a holiday let alongside its trading business. The estate agency that employs lettings staff and itself sits inside the agent supervisory net. The compliance officer at a company of fifty whose CEO bought commercial property under a personal-name structure and whose tenants are now writing in.
The 2026 implementation calendar in one paragraph
For the Renters' Rights Act 2025, local authorities gained investigatory powers on 27 December 2025, including rights of entry, document demand, and third-party data access [6]. The main commencement was the so-called "big bang" date of 1 May 2026, when all assured tenancies, new and pre-existing, moved to the new periodic regime, Section 21 was abolished, and the reformed Section 8 grounds in Schedule 1 took effect [1][5]. For the Employment Rights Act 2025, the first commencement order (SI 2026/3) brought into force, on 6 April 2026, day-one rights to paternity leave, unpaid parental leave and unpaid bereavement leave, statutory sick pay from day one with the three waiting days abolished, and sexual harassment as a qualifying disclosure under whistleblowing law [3]. The next major tranche, from October 2026, reinstates employer liability for third-party harassment [2]. The 1 January 2027 phase reduces the unfair dismissal qualifying period from two years to six months and removes the cap on the compensatory award [2].
That is the calendar. Now the intersection.
Five places where the two Acts collide
1. The dual-hat owner
The single most under-discussed feature of 2026 compliance is that thousands of SME owners now wear two hats that the state regulates separately. As employer, the owner must read the ERA and adjust handbooks, sick-pay processes, harassment policies and leave entitlements. As landlord, the same owner must redo tenancy templates, renotice rent reviews on the new schedule, and prepare for the Private Rented Sector Database (regional rollout from late 2026, full launch in 2027) and the Landlord Ombudsman (expected 2028).
These two streams used to sit in separate cabinets. After May 2026, they share calendar slots. If the same person owns both decisions, both can slip.
2. Ground 5C: where employment and tenancy actually meet
Under the reformed Schedule 1, Ground 5C is a mandatory possession ground where a property was let to a tenant in consequence of their employment, the employment has ended, and a new employee needs the property [1][5]. A mandatory ground means the court must order possession once the conditions are proved, in contrast to a discretionary ground, where the court weighs whether possession is reasonable. This is the literal point of collision between the two Acts. The owner-manager who provides accommodation to a site manager, a live-in farm worker, a caretaker, a publican, or a hotel housekeeper now has to do two things correctly at once: end the employment lawfully under the ERA, and recover possession lawfully under the RRA.
A flawed dismissal does not just create an employment tribunal claim, it weakens the basis for the possession ground. Careless possession work also carries direct financial exposure on the landlord side: re-letting or re-marketing a property within the twelve-month restricted period that follows possession on the moving-in or selling grounds (Grounds 1 and 1A) is an offence that can attract a civil penalty of up to £40,000 [7]. The two regimes feed each other, and the staff member who signs the notice is often the same staff member who manages the contract.
3. Third-party harassment, with tenants as the third party
From October 2026, the ERA reinstates employer liability for third-party harassment where the employer fails to take all reasonable steps to prevent it [2][8]. The phrase "all reasonable steps" is a legal test, not a guideline. It asks whether the employer can show, after the event, a documented and proportionate set of measures (policy, training, reporting line, response standard) that a reasonable employer of similar size and resources would have put in place. Further regulations and Acas guidance are expected to refine the standard. The practical reading for landlord-employers is clear: tenants are third parties.
A lettings administrator harassed by a tenant during an inspection. A property manager subjected to abuse on a rent-collection visit. A maintenance worker propositioned at a property they entered alone. In each case, the new ERA liability is on the employer to have anticipated the risk, set out controls, and acted when an incident was reported. For SMEs whose property exposure means staff routinely cross into tenanted spaces, the design of those controls is now a 2026 piece of work, not a 2027 one.
4. The record-keeping load doubles in the same six months
The Renters' Rights Act introduces the Private Rented Sector Database, with regional rollout expected from late 2026 [5]. Landlords will be required to register and maintain accurate property and contact records. In parallel, the ERA's day-one rights mean payroll, leave tracking and grievance handling all need to be tighter from 6 April 2026, because there is no longer a qualifying period sitting between hire and entitlement [3].
For a small operation, this is the year the spreadsheet stops being enough. Either an integrated system goes in, or the owner accepts an audit risk on both sides of the business simultaneously.
5. Whistleblowing now covers sexual harassment disclosure
A quieter but consequential change from 6 April 2026: sexual harassment is now a qualifying disclosure under whistleblowing law [3]. A qualifying disclosure is information that, in the reasonable belief of the worker making it, tends to show a relevant wrongdoing (a criminal offence, a breach of legal obligation, a health and safety risk, and so on). Once the disclosure qualifies and is made in line with the statutory procedure, the worker gains whistleblower protection. The change means that a staff member who reports sexual harassment, whether the perpetrator is internal or external, is protected from detriment and unfair dismissal as a whistleblower.
For landlord-employers, that matters because the relevant report may concern a tenant, a contractor, or a supplier, and not a colleague. The grievance procedure that worked for an office of fifteen accountants is unlikely to be designed for a member of staff disclosing tenant-side conduct. The Act has effectively widened the universe of people whose behaviour can trigger a whistleblowing claim against the employer.
Private Rented Sector Database
What good looks like in 2026
Three behaviours separate the SMEs that get through 2026 cleanly from those that do not.
First, a single calendar. Both Acts have phased commencement dates, and they are public. There is no excuse, in May 2026, for a board not to know what is due on 1 October 2026, 1 January 2027, and at the next PRS Database rollout date. A single, owner-visible compliance calendar that covers both regimes is the lowest-cost intervention available.
Second, a refreshed training register. The £40,000 civil penalty for misusing a possession ground tends to land on the staff member who served the notice and the owner who failed to train them [7]. The same is true on the employment side: the third-party harassment standard from October 2026 will be read against the training records of the staff whose conduct is being assessed. Dated, role-specific training is now the default evidence pack. The absence of it is itself a finding.
Third, an honest read of capacity. Many owner-managed SMEs run both an employer and a landlord compliance function on the same person. That worked in 2023. It will be uncomfortable in 2026. Either outsource one side, or name and resource the workload.
An operator's read of the 2026 to 2027 calendar
The points below translate the calendar into the practical actions an HR or Compliance lead should already have in hand. They are organised by commencement phase, and each one carries an evidence test: not whether the policy exists, but whether you could show, on the day a regulator asks, that it was in place and dated.
Already in force. On the housing side, local authority investigatory powers have been live since 27 December 2025, so a documented response protocol for a council notice should already exist. All tenancies have sat under the new regime since 1 May 2026, which means tenancy templates, notice wording and possession-ground references need to be current, and staff trained on the new Schedule 1 grounds with that training signed off and dated. On the employment side, statutory sick pay has been payable from day one since 6 April 2026, so the payroll change should be confirmed live; day-one paternity, unpaid parental and unpaid bereavement leave policies should be updated and line managers briefed; and the grievance procedure should be able to handle a sexual-harassment disclosure as a qualifying disclosure, including where the report concerns someone outside the organisation.
Due October 2026 (ERA tranche). Third-party harassment liability goes live, so every recurring staff-tenant, staff-contractor and staff-public interaction should be risk-assessed. The "all reasonable steps" pack, the policy, the training, the reporting line and the response standard, should be assembled and dated before the October commencement, not after the first incident. Field staff should be briefed on how to report tenant and contractor conduct, and that briefing should land in the training register.
Due late 2026 (RRA tranche). The Private Rented Sector Database begins its regional rollout, so registration data should be ready: owner records, agent records and property records need to be accurate and reconcilable. Where letting agents are used, confirm they are registered or in process, because the landlord does not escape exposure by delegating.
Due 1 January 2027 (ERA tranche). The unfair dismissal qualifying period drops from two years to six months, which makes probation, performance management and onboarding processes the place to focus. The cap on the compensatory award is removed at the same date, so settlement strategy and insurance cover deserve a fresh look. Any dismissal that needs to complete lawfully before protection attaches should be worked through well ahead of the date, not against it.
Ongoing. A single 2026 to 2027 compliance calendar should be maintained and owner-visible, with both Acts on one view. The training register should be dated, role-specific, and CPD-accredited where relevant. A capacity check matters: if one person is carrying both the employer and the landlord compliance function, that should be a named decision with a named owner, not a default. And two items belong on the watch list beyond this window, the Landlord Ombudsman, expected in 2028, and the Decent Homes Standard for the private rented sector, anticipated later in the decade.
The institutional read
The Renters' Rights Act and the Employment Rights Act were drafted as separate responses to separate political pressures. Read in sequence, they signal something coherent: a tightening of the discretionary space that small employers and small landlords have historically operated in, and a corresponding rise in the documentation and process standards expected of them.
Many owner-managers want clearer rules and predictable enforcement. What 2026 is asking of them is more specific: treat compliance as a continuous function, read across regulatory regimes, and invest, ahead of the next commencement date, in the people who carry the load.
The SMEs that get this right in 2026 will not be the ones that read each Act fastest. They will be the ones that built a calendar, named the owner of each due date, and trained the people who sign the notices and the people who answer the door.
Reflection questions for your own organisation
Use these questions to convert the reading into a short internal exercise. There are no right answers, only useful ones.
- Who in your business owns the 2026 to 2027 compliance calendar, and is it visible to the board, not only to the owner?
- If you provide accommodation to any member of staff, what does your evidence pack look like for ending that arrangement lawfully under both Acts, in the right sequence?
- For staff who routinely enter tenanted spaces, what controls have you documented to satisfy the "all reasonable steps" test from October 2026?
- Where is your current training register strongest, and where is it weakest, when read against the £40,000 civil penalty for misuse of possession grounds?
We hope this article was helpful. For more information from Auren Institute, please visit their CPD Member Directory page. Alternatively, you can go to the CPD Industry Hubs for more articles, courses and events relevant to your Continuing Professional Development requirements.
References:
All sources verified at the date of writing. Statutory texts and regulations are cited to the official legislation register; commencement detail and practical obligations are cited to UK Government and Acas guidance.
1. Renters' Rights Act 2025 (c. 26). legislation.gov.uk https://www.legislation.gov.uk/ukpga/2025/26/contents
2. Employment Rights Act 2025 (c. 36). legislation.gov.uk. https://www.legislation.gov.uk/ukpga/2025/36/contents
3. The Employment Rights Act 2025 (Commencement No. 1 and Transitional and Saving Provisions) Regulations 2026 (SI 2026/3). legislation.gov.uk. https://www.legislation.gov.uk/uksi/2026/3
4. The Employment Rights Act 2025 (Commencement No. 2 and Transitional and Saving Provisions) (Amendment) Regulations 2026 (SI 2026/323). legislation.gov.uk. https://www.legislation.gov.uk/uksi/2026/323
5. Ministry of Housing, Communities and Local Government, Guide to the Renters' Rights Act. GOV.UK. https://www.gov.uk/government/publications/guide-to-the-renters-rights-act/guide-to-the-renters-rights-act
6. Ministry of Housing, Communities and Local Government, Investigatory powers guidance for Renters' Rights Act 2025. GOV.UK. https://www.gov.uk/government/publications/investigatory-powers-guidance-for-renters-rights-act-2025/investigatory-powers-guidance-for-renters-rights-act-2025
7. Ministry of Housing, Communities and Local Government, Civil penalties under the Renters' Rights Act 2025 and other housing legislation. GOV.UK. https://www.gov.uk/government/publications/civil-penalties-under-the-renters-rights-act-2025-and-other-housing-legislation/civil-penalties-under-the-renters-rights-act-2025-and-other-housing-legislation
8. Acas, Sexual harassment: guidance for employers. https://www.acas.org.uk/sexual-harassment
