An estimated 220,000 households could leave England’s private rented sector by the end of 2026, with Pepper Money saying smaller landlords are twice as likely to sell as those with larger portfolios and warning that supply may not be replaced at the same rate.
Renters Rights Act linked to 65,000 potential exits
Pepper Money’s modelling suggests more than 65,000 of those projected exits are linked directly to the Renters Rights Act, which comes into force in England on 1 May. The lender said changes to tenancy structures, notice rules and wider management obligations are pushing some landlords to review whether the sector still stacks up.
Paul Adams, sales director at Pepper Money, said the combination of legislative change and rising operating costs was forcing many landlords to reassess their portfolios. He said the risk is that rental supply falls faster than it can be replaced, especially with only 5 percent of landlords buying a new rental property in the last year and build-to-rent delivery still subdued.
For landlords already preparing for the new regime, Landlord Knowledge recently reported that repair audit trails are becoming more important before the Renters Rights Act starts. The latest Pepper Money figures suggest compliance pressure is now feeding into disposal decisions as well.
Pepper’s research also points to a divide between landlord types. Single-property owners were found to be twice as likely to quit the market as landlords with two or more properties, reinforcing the trend towards a more professionalised sector dominated by bigger operators.
South East faces biggest supply hit
The South East is expected to see the largest numerical loss, with around 46,200 households leaving the sector by the end of the year – just over a fifth of all projected exits. In the North East, 21 percent of landlords said they plan to sell, the highest regional proportion, although the smaller size of the rental market means that would account for about 8 percent of total exits.
That matters because rents remain elevated in several of the regions expected to lose the most stock. According to the release, average advertised rents stand at roughly £1,893 a month in the South East, £1,649 in the East of England, £1,473 in the South West and £2,716 in London. Landlords will recognise the other side of that picture too: Landlord Knowledge reported this week that rent growth is losing momentum in parts of the market, even as supply remains historically tight.
This follows Landlord Knowledge’s recent coverage of weaker rent growth and rising compliance pressure, both of which point to a market where margins are getting tighter for smaller investors. If more one-property landlords decide the extra administration is no longer worth it, stock losses could be concentrated in exactly the parts of the sector that have long housed mainstream tenants.
The lender said its analysis draws on the English Housing Survey, Pegasus Insight’s landlord panel and its own January 2026 polling. In a note accompanying the findings, Pepper said the headline estimate reflects the maximum market potential once expected sales, portfolio size and the share of properties likely to be bought by other landlords are taken into account. More detail is available from Pepper Money.
What this means for landlords
- If you’re a smaller landlord: review the cost of new compliance duties now rather than waiting until the first deadlines bite.
- Watch for: local supply squeezes in higher-rent regions where exits could put further pressure on tenants and councils.
- Bottom line: even if the 220,000 figure proves high, the direction of travel is clear – more landlords are weighing up exit as regulation and costs rise.
Editor’s view
The 220,000 figure is a projection, not a count of confirmed sales, so landlords should treat it carefully. But the warning should not be dismissed either: when smaller owners start to feel boxed in by cost, admin and weaker pricing power, supply can drain out of the market long before official data catches up.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 17 April 2026
Sources: Pepper Money landlord exit research, English Housing Survey, Pegasus Insight Landlord Panel, Rightmove Rental Trends Tracker
Related reading: Landlords lose pricing power as rents stall
