Landlord exodus: 220,000 rental properties to vanish this 12 months as Renters’ Rights Act arrives

Nearly a quarter of a million rental properties will disappear from the private rental sector in England by the end of this year, a new study has claimed.

There are expected to be 220,000 fewer homes to rent by the end of 2026, according to the research by mortgage lender Pepper Money, with Labour’s Renters Rights Act prompting many landlords to throw in the towel.

It means about 5 per cent of rented homes are set to disappear. 

Buy-to-let has ballooned over the last 15 years, from 3.1 million households in 2008-09 to 4.7 million in 2024-25, but this is now sliding into reverse. 

The total value of privately rented housing nosedived last year as more landlords sold properties to owner occupiers, according to Savills data.

It said the private rented sector saw its value decline by 5.1 per cent, or £48billion, in 2025, which was the biggest drop this century. 

And over the past three years, Savills said the total value of the rental sector has fallen by £79billion and is now worth £1.47trillion. 

Meanwhile, owner occupied homes grew in value over the same period, suggesting their share of the housing stock is on the rise while landlords’ share has diminished.

Why are landlords heading for the exit?

Many landlords feel they have been dealt blow after blow over the past decade. They now face a 5 per cent stamp duty surcharge if they want to buy a property, they can no longer fully offset their mortgage interest costs against their tax bill, and they have dozens of regulations they now need to adhere to. 

But it is the forthcoming Renters’ Rights Act, due to come into effect next month, which has emerged as a key catalyst.

From 1 May, almost 40 years of legislation underpinning the private rental sector will change overnight.

The Act will ban ‘no-fault’ evictions, and force landlords to give a proper reason for telling tenants to leave such as selling the property. Wanting to put up the rent is not good enough. 

Fixed-term tenancies will be abolished, meaning renters will be able to end tenancies at any time as long as they give two months’ notice.

It will also give renters greater rights to challenge poor conditions and unreasonable rent increases without fear of retaliatory eviction.

Bidding wars will be ended, with landlords unable to accept more than the asking rent, and it will also ban landlords from demanding more than one month’s rent upfront.

Howard Levy, director and buy-to-let specialist at mortgage broker SPF Private Clients, says he expects to see many more smaller ‘accidental landlord’ clients looking to sell over the coming months, while those with larger portfolios are more likely to remain. 

‘Most have owned these properties for decades – prior to the tax changes with regard to rental income – and are selling up, even though they know they will incur a capital gains tax bill, because they are finding it impossible to continue,’ he says. 

‘This has been compounded by the Renters’ Rights Bill which is imminently coming into force, potentially making it harder for landlords to gain possession of their properties as well as resulting in extra costs associated with the changes.’

Paul Adams, sales director at Pepper Money, said: ‘It’s important to recognise the potential unintended consequences for supply and pricing at a time when the sector is already under pressure. 

‘These legislative changes follow a series of fiscal and regulatory shifts that have cumulatively squeezed landlord returns and altered the economics of buy to let investing. 

‘With just 5 per cent of landlords buying a new rental property in the last year, and new starts in build to rent remaining subdued, it’s unlikely this exiting stock will be replenished, meaning we could see a dip in rental dwellings this year.’

What will the landlord exodus mean for renters? 

For those renters directly impacted by a landlord selling up, it could mean they are forced to leave the property and find an alternative place to live. This could put more pressure on social housing.

Only 30 per cent of privately rented properties being sold will be bought by another investor, according to Pepper Money. 

This means the majority of rental stock is likely to be bought by first-time buyers, home movers and those looking for a second home. 

Longer-term, the result of a further exodus this year will be higher prices for renters, according to mortgage broker Howard Levy. 

‘With fewer rental properties for tenants to choose from, demand will likely push rents up,’ adds Levy.

‘This, in turn, will produce better returns which will eventually entice investors back into the market, although this will predominantly be landlords purchasing via a limited company structure. 

‘The problem is that nobody knows how long it will be before the supply of rental stock increases again.’

Purchasing a buy-to-let in a limited company structure, rather than in your own name, means you can pay corporation tax at 19 per cent to 25 per cent, instead of income tax at 20 per cent to 45 per cent.

Jeremy Leaf, a north London estate agent, thinks it will become and landlords’ market, giving them the ability to pick and choose between the best tenants. He also thinks some properties will be less well looked after.

‘Landlords will have to be tougher in terms of referencing the tenants and guarantors because [evicting them] is going to be much more difficult, particularly given the current court backlog,’ says Leaf. 

‘If demand remains high, some landlords may be less inclined to carry out works that are really necessary because they may take the view – why should they bother improving the property to the standard that they would have done previously, when there is four or five people prepared to rent in its existing condition? 

‘We could therefore see a lowering of standards among those landlords looking to cut corners.’

Where are most landlords likely to be selling? 

The South East is expected to see the largest number of landlords exit the market, with 15 per cent saying they plan to sell in 2026.

More than 46,000 rental properties are projected to be sold off there, accounting for over a fifth of all exits nationwide. 

Meanwhile, the North East has the highest proportion of landlords intending to sell, with around one in five planning to exit the sector this year.

In London, where house prices are highest and rental yields low, landlords are perhaps prepared to play more of a waiting game, based on Pepper’s findings.

An estimated 29,200 rental properties are expected to disappear over the course of this year. 

Estate agent Leaf says: ‘We are seeing landlords continue to consider selling up – but not all are definitely headed for the exit. 

‘Of those who are sticking with investing in property, many are switching from let-only to managed properties because they better appreciate the risks of going it alone, the enforcement issues and the fines for getting it wrong. 

‘They also recognise that the Renters’ Rights Act is very much in favour of renters rather than landlords. These trends are likely to continue after the Act has come into force, with many landlords waiting to see how it goes.’