The UK’s private rental sector is experiencing growing instability as many landlords begin selling their properties in response to rising costs, regulatory changes, and the anticipated Renters’ Rights Bill.

Official data and independent research indicate that many private landlords are preparing to reduce their property portfolios or exit the market entirely.

The recent trend has seen thousands of former rental homes placed on the sales market rather than being re-let. This shift is driven by a combination of economic pressures and structural reforms, including the expected abolition of no-fault evictions, new tenancy frameworks, and enhanced property standards.  Arguably, this was what some say the government wanted as they believe that this additional 'for sale' stock reduces house price inflation.  The problem is that reducing rental stock only ends up increasing rents.  This does two things, unfairly hits those that can't buy and reduces available cash for those would-be first time buyers currently renting and trying to save deposits to be able to buy.

The Renters’ Rights Bill, which recently progressed through the Committee Stage in the House of Lords, proposes wide-ranging changes reshaping the landlord-tenant relationship.

Buy to let landlords: why are they leaving the rental market?

For many landlords, high maintenance expenses and a growing administrative burden have become difficult to manage. Rising mortgage rates, removing the ability to claim mortgage interest as a deductible expense thereby paying more tax and stricter compliance requirements have only added to the strain.

While the government has argued that the reforms will target a small number of poor-quality landlords, research suggests a broader impact.  The true impact is that all landlords that own properties outside company structures are hit.  And, anything that hits landlord income reduces the amount of monies the landlord has remaining to spend on repairs and improvements.

Many private landlords are already struggling with limited profitability and increasing tax obligations, making continued participation in the sector financially unviable.   That coupled with punitive measures such as penalties if a deposit is not properly registered can wipe out three months' rent.  The deposit rules being that if a landlord inadvertently does not register a tenant's deposit properly, they are on the hook to pay the tenants up to three times the original deposit requested.  This couple with end of tenancy repairs at a time when interest rates have risen sharply is just too much for many.

Data from letting platforms and property analysts shows that the proportion of rental homes being sold is rising steadily. More than one in ten new property listings were previously let properties in recent months.

Most of these homes have not returned to the rental sector, suggesting that new buyers will likely be owner-occupiers rather than landlords. This trend is removing a large number of homes from the rental market, reducing the overall supply.

The shortage of available rental properties is becoming more pronounced. New ‘to let’ listings have declined and remain well below pre-pandemic levels.

The total number of homes available for rent is at a historic low. With fewer rental properties on the market and high demand, many tenants face increased competition and rising rents.

UK rental affordability: how bad will it get?

Affordability is now a serious concern. Rental prices have continued to climb, with a growing proportion of properties listed at higher rates. Finding an affordable home is becoming increasingly difficult for many renters, particularly those in high-demand areas.

Experts have also noted that landlord exits could have long-term consequences for housing quality. Smaller landlords who previously maintained their homes to high standards are now being replaced by private buyers or developers who may not re-enter the letting market.

The loss of such properties could reduce the overall quality of the remaining rental stock, particularly in regions already struggling with housing shortages.

PRS Landlord exodus: what types of landlords are selling up?

The motivation behind landlords’ decisions to exit is not solely linked to regulation. Many operate just one rental property and earn modest profits, making them vulnerable to even small financial shocks.   

The complexity of tax rules and the time required to meet compliance obligations have also led to frustration. Landlords have increasingly needed professional support to manage their responsibilities, with the changing legislation unsettling many.

PRS Landlords: is the Renters Rights Bill responsible for the landlord exodus?

The upcoming Renters’ Rights Bill is widely viewed as the catalyst accelerating this PRS (private rented sector) landlords selling up. Its proposed reforms include stricter rules around rent increases, the introduction of periodic tenancies, and stronger tenant rights regarding deposits, pets, and property standards.

While aimed at protecting renters, the bill contributes to uncertainty among landlords who are unable to continue operating under the new framework.

As the private rental sector recalibrates, landlords and tenants face an uncertain future. The long-term impact of the bill and continued economic pressures remain to be seen, but current indicators suggest the rental market is under significant and growing strain.

FAQs

What is causing landlords to sell their properties?

Landlords are facing high maintenance costs, complex regulations, and tax pressures. These factors are making rental properties less profitable and more difficult to manage.

 Will the Renters’ Rights Bill make it harder to rent a home?

The bill aims to protect tenants, but its reforms are leading many landlords to leave the market. This is reducing the supply of available rental homes and making it harder for tenants to find housing.

Are rental prices expected to keep rising?

Yes. With fewer rental properties on the market and strong demand, rents are likely to continue increasing, especially in high-demand areas.