The value of the UK private rental sector contracted by £48 billion last year – the largest single-year decline recorded in the past century, according to new analysis from Savills.
The data shows the PRS has now shrunk for three consecutive years, losing a combined £79 billion in value since 2022. Despite overall UK housing stock growing by 3.8 percent to £9.18 trillion, the rental sector was the only tenure to contract.
Owner-occupied sector grows as PRS declines
While the private rental sector fell by 5.1 percent over three years, owner-occupied housing values increased. Mortgage-free homeownership grew by 4.2 percent to £3.46 trillion, while mortgaged owner-occupation rose 6.7 percent to £3.13 trillion.
This follows Landlord Knowledge’s recent reporting on landlord exits ahead of the Renters’ Rights Act, with council data confirming accelerating sales by private landlords across multiple regions.
Lucian Cook, head of residential research at Savills, said: “Over the past 25 years, we’ve grown accustomed to a story of the private rented sector expanding at the expense of people’s ability to get onto the housing ladder. But while deep-seated housing challenges remain, lighter regulation in the mortgage market and tighter oversight of the private rented sector are gradually beginning to shift that narrative.”
Professionalisation accelerates as smaller landlords exit
The Savills analysis attributes the sector’s contraction to changing tenancy legislation, higher operating costs and increased mortgage rates – factors that have prompted private landlords to review their portfolios.
Cook added: “Larger landlords, better equipped to absorb added costs and requirements, have taken on some of this stock, contributing to a more professionalised PRS. But others have been sold to owner-occupiers, reducing the sector’s overall size.”
The shift reflects a broader pattern identified in SafeDeposits Scotland research showing landlords selling properties at three times the rate they are purchasing – a trend now evident across the UK market.
First-time buyers benefit from increased supply
First-time buyer activity has strengthened as former rental properties reach the sales market. Savills found that less stringent mortgage regulations, falling rates and rising wages have supported owner-occupation growth, with the value of mortgaged homes increasing by £197 billion since 2022.
However, Cook cautioned that challenges remain: “The reduction in homes available to rent will also continue to push up rents, posing challenges to those who are struggling to save for a deposit.”
What this means for landlords
- If you’re considering selling: Former rental properties are finding ready buyers, particularly first-time purchasers, but CGT liabilities may offset any timing benefits.
- If you’re holding: Reduced competition from exiting landlords could support rents, but the regulatory burden continues to increase.
- Watch for: The RRA implementation in May will likely accelerate exits further – those planning to sell should factor this into timing decisions.
- Bottom line: The PRS is professionalising rapidly. Smaller landlords face a stark choice between scaling up, incorporating, or exiting.
Editor’s view
A £48 billion contraction is not a blip – it represents a structural shift in UK housing. The government’s dual approach of easing mortgage access while tightening landlord regulation is working exactly as intended. For those who remain, the shrinking competition may eventually improve returns. But the transition period will squeeze margins further, and the smallest landlords are voting with their feet.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 10 March 2026
Sources: Savills Research
Related reading: Scottish landlords sell three times faster than they buy
