No one can deny that the rental market is changing, arguably more than it ever has before.
Between shifting interest rates, tax pressures and regulatory changes, there has been much talk of a surge in landlords leaving the sector. According to a recent poll by software provider Alto, 34% of letting agents reported a large increase in landlords selling up, the majority of them being smaller landlords with one or two properties.
But is the situation really as extreme as some might think, or can these changes actually be a positive thing for the rental market? And, perhaps most importantly, what effect will all of this have on both the landlords and tenants who choose to remain?
“We’re all familiar with the headlines by now. In recent years, it’s felt like every week there’s a new story suggesting that landlords are on the verge of leaving the market in their droves,” Tim Parkes, CEO of RAW Capital, says.
“While those concerns reflect some very real pressures, the reality is often more measured than the headlines suggest.”
“Much of the discussion around landlords leaving the sector is based on perception rather than hard evidence,” adds Sean Hooker, head of redress at Property Redress. “Some landlords are undoubtedly choosing to exit, but in many cases, this reflects natural portfolio decisions rather than a single trigger.
“A number of long-standing landlords are reaching a point where they are considering retirement, releasing capital or reducing the size of their portfolio. At the same time, ongoing legislative change means some landlords are reassessing whether their properties still work for them financially or operationally,” Sean continues.
One key legislative change is the Renters’ Rights Act, which will come into force from 1st May 2026. Major features of the Act include the abolishment of section 21 ‘no-fault’ evictions, all assured tenancies becoming periodic, and rent increases being limited to once per year.
According to Pegasus Insights’ Landlord Trends Q3 2025 report, 73% of landlords believe that the Act will negatively impact their lettings activity, while 81% believe it will have negative consequences for the private rented sector (PRS) as a whole, and 71% said they plan to increase rent to absorb new costs.
However, Sean says that the Renters’ Rights Act is “only one factor,” and that “the sector is seeing a period of adjustment where landlords need to review future requirements, property standards and regulatory expectations to ensure their investments remain viable.”
“Without question, higher borrowing costs, tax changes and a heavier regulatory burden, including reforms under the Renters’ Rights Act, have all made some BTL investors think more carefully about how they operate,” Tim explains.
Bob Singh, founder of Chess Mortgages, believes that the current problems faced by landlords began with the then-chancellor George Osborne’s budget in July 2015, in which he announced proposals to restrict the tax relief that BTL landlords were entitled to claim on their mortgage interest.
“Since then, the lustre of buy-to-let has been steadily fading with successive years of restricted relief, and now the Renters Rights Act,” Bob says. “Landlords who are earning above the basic rate band of tax suddenly found themselves at a disadvantage, being able to claim only 20% of the finance costs against the gross rental income.
“Many who had refinanced their properties several times to further grow their portfolios suddenly were faced with huge tax bills, making some landlords worse off. This was particularly painful when interest rates spiked.
He notes that now, many “are left with portfolios not providing the levels of return hitherto seen and are opting now to sell off these assets to deleverage their position.”
However, Sean says that “for many landlords, the sector still makes financial sense, but it requires taking a realistic view of future compliance requirements and ensuring their portfolio is structured in a way that works for them.
“The fundamentals of the rental market remain strong. Demand for rental homes continues to be high and, in many areas, yields remain attractive.”
Similarly, Tim stresses that “the demand for rental housing remains strong and, for landlords with clear long-term strategies, there is still a compelling long-term case for residential property.”
“According to recent data from Dwelly, 1.04% of landlords have left the market in the last year,” he says, “the word ‘exodus’, so often bandied around, does not seem appropriate; a 1% dip hardly points to a dramatic collapse.
“Instead, it reflects a sector that naturally ebbs and flows, with some investors exiting while others enter, restructure or diversify. In fact, the relatively modest scale of that change suggests landlords are often more resilient to tax and regulatory changes than they are sometimes given credit for.”
Nevertheless, Housing Hand’s Understanding Renters in 2025 report found that several tenants in its focus group were worried about landlords increasing rent or selling up in the wake of the Renters’ Rights Act.
TwentyEA revealed that in Q1 2025, 15.6 % of new property sales instructions were previously rented ones, rising significantly from 9.8 % a year earlier, with just 2.9 % of those homes going on to be re-let. Meanwhile, Savills reported that the UK PRS fell £48bn in value in 2025, the biggest drop this century.
If rents increase with reduced competition, it could not only make rental properties harder to afford but could also make it more difficult for tenants to save for a deposit to buy their own home.
However, while Sean acknowledges that “where landlords do leave, it inevitably increases demand for the homes that remain available to rent.” He points out that “we are also seeing new investors entering the market with a clearer understanding of regulatory expectations from the outset.”
“This should not be viewed as the end of the rental sector, but rather a period of readjustment that will likely lead to a more professional and resilient market in the long term.”
Furthermore, Housing Hand’s report also highlighted that the overwhelming sentiment from its focus group was that the Renters’ Rights Act is a good thing for tenants, something which is reflected across wider tenant discourse.
“The fact that some landlords are selling up and leaving the industry is, in my eyes, a good thing,” says Paddy.
“I don’t think it’ll drive up prices because they [landlords] can be appealed now if they go up too much. I think it’ll just put some houses back on the market or another landlord will come in and scoop them up,” he continues.
Meanwhile, Elizabeth believes that the Renters’ Rights Act is “long overdue” and “only the beginning of greater protections for renters.”
“For me, I’m excited to see these policies come into action,” they say, “they mean greater security and trust for me in my own home, which in the past has been neglected by dodgy landlords for the sake of profits.”
Moving forward, Sean says that “the most important step to support landlord confidence is clarity. Clear guidance, realistic implementation timelines and consistent standards help landlords understand what is expected of them and plan accordingly.”
Meanwhile, Tim calls on lenders to remember that “a more measured view of the market does not mean doing any less to support investors.
“As noted, the challenges for landlords are real, and they are causing headaches for some. But, if anything, this underlines the importance of giving landlords and their brokers access to the broadest possible range of financial options, allowing them to structure their borrowing in a way that reflects their long-term objectives and the realities of a changing market,” he says.
Please visit:
Our Sponsor
