More than a quarter of properties sold by landlords last year included sitting tenants, according to new research that shows the private rented sector continues to shrink despite some homes remaining in rental use.
The latest Landlord Trends data from Pegasus Insight found that 26 percent of landlord sales involved properties with tenants still in occupation. Around 30 percent of these homes were purchased by other landlords, keeping them within the rental sector. However, the majority – 34 percent to first-time buyers and 29 percent to other residential buyers – left the PRS entirely.
The findings come as separate analysis from Savills shows the private rented sector has fallen in value by 5.1 percent over the past year, marking three consecutive years of decline and a £79 billion reduction in total value since 2022. Meanwhile, the overall UK housing market rose by 3.8 percent – around £336 billion – during the same period.
Where landlord stock is going
The research shows landlords sold an average of 1.8 tenanted properties each, with buyers falling into distinct categories. First-time buyers account for the largest share of purchasers at 34 percent, followed by other landlords at 30 percent and other residential buyers at 29 percent.
This follows Landlord Knowledge’s report on major letting networks losing thousands of managed properties as landlords exit ahead of the Renters Rights Act. The new data quantifies where these homes are ending up – with almost two thirds moving into owner occupation.
Mark Long, founder and director of Pegasus Insight, said: “Landlord sales do not automatically mean a rental property disappears from the sector. In a meaningful minority of cases the property is simply being transferred from one landlord to another, and sometimes sold with tenants already in place.”
However, he warned: “The overall direction of travel still points to a shrinking PRS. When a substantial proportion of landlord sales are going to first-time buyers or other owner occupiers, it inevitably reduces the pool of homes available for rent.”
Policy consequences
Long called on policymakers to recognise the cumulative impact of regulation and taxation on landlords, particularly smaller operators. “Many are deciding that the pressures and uncertainty are no longer worth it. This is significant because the PRS provides homes for around 20 percent of UK households, so policy decisions affecting landlords ultimately have consequences for tenants too,” he said.
The recent drop in rental competition suggests some easing of tenant pressure, though industry figures warn this may prove temporary if supply continues to fall faster than demand.
What this means for landlords
- Selling with tenants in place: More than a quarter of landlords are choosing this route – it can simplify the process and appeal to investor buyers.
- Investor buyer interest: Three in ten purchases go to other landlords, suggesting opportunities remain attractive for those entering or expanding portfolios.
- FTB competition: First-time buyers are the largest buyer group – landlords selling vacant properties may see strong demand from this segment.
- Portfolio planning: With 63 percent of sales leaving the PRS, landlords retaining stock may benefit from reduced competition in their local markets.
- Bottom line: The sector is contracting, but landlords selling are finding buyers – the question is whether those replacing them are investors or owner-occupiers.
Editor’s view
The 30 percent of sales going to other landlords provides some comfort that not every exit removes rental supply permanently. Yet with nearly two thirds of sales moving to owner-occupiers, the maths points in one direction. First-time buyers gaining access to stock is positive for them individually, but it does not address the structural shortage that regulation and taxation have created. Until the balance shifts, tenants will face the consequences of a shrinking sector.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 19 March 2026
Sources: Pegasus Insight, Savills
Related reading: Major letting franchise loses 4,000 homes as landlords exit ahead of RRA
