As UK landlords begin to grapple with the complexities of the Renters' Rights Act, which came into effect on 1 May 2026, they are facing a critical concern that could see guarantors released from their financial obligations. A rent increase, even one implemented via the statutory Section 13 notice process, may be deemed a 'contractual variation' under the law, triggering the Holme v Brunskill principle and potentially discharging the guarantor.
The root of this issue lies in a 1878 Court of Appeal case, Holme v Brunskill, which established the 'variation rule'. This principle dictates that if the terms of a contract supported by a guarantee are altered without the guarantor's explicit consent, they may be discharged from their liabilities. Rent increases, which represent a greater financial exposure for guarantors than originally agreed, fall squarely into the type of change this rule was designed to address.
Under the new Act, fixed-term tenancies have been abolished and replaced with periodic tenancies. Rent increases can only be implemented through a statutory Section 13 notice, proposing the market rent with at least two months' notice. However, it remains unclear whether such a rent increase would constitute a 'contractual variation', thereby potentially triggering the Holme v Brunskill principle and releasing the guarantor.
Legal experts warn that this specific point has not yet been tested in the courts, leaving landlords uncertain about their position. The outcome will depend on the precise wording of the original guarantee deed, with well-drafted deeds anticipating statutory changes, but many older or less comprehensive agreements may not.
The implications for both landlords and tenants are far-reaching. If a court rules that guarantees were discharged due to rent increases under the new Act, landlords could find themselves without the financial security of a guarantor for outstanding rent. Conversely, guarantors might unknowingly be released from their commitments, creating a complex situation for all parties involved.
Property118 has highlighted this 'guarantor trap' as a significant danger for property owners navigating the new regulatory landscape. As landlords strive to adapt to the changing rules, they must also consider the potential consequences of these changes on their financial security and that of their guarantors.