The UK rental sector is facing a major shake-up, with new data revealing that two-thirds of landlords plan to exit the market or reduce their portfolios in 2025. According to SpareRoom, 67% of landlords are reconsidering their investments due to increased taxation, regulatory uncertainty, and new legislation that threatens their ability to manage properties effectively.
Rental sector under threat as landlords exit
The latest figures indicate that 34% of landlords plan to leave the rental market entirely this year, while 29% intend to reduce their property holdings. In London, the situation is even more pronounced, with 42% of landlords saying they will sell up in 2025. These exits could significantly impact rental supply, driving up prices and making it even harder for tenants to find affordable accommodation.
SpareRoom’s director, Matt Hutchinson, highlighted the consequences of landlords leaving the sector, stating, “Lack of supply is already inflating rents, but if landlords follow through on their intentions, the problem will become even more severe.” He added, “The sector needs change that protects and incentivises supply. If the Government wants stability and affordability, then change has to work for everyone.”
Landlord concerns over tax and regulation
The primary cause of landlord dissatisfaction is the Renters’ Rights Bill, currently being debated in the House of Lords. The bill includes the proposed abolition of Section 21 ‘no-fault’ evictions, a move that 75% of landlords see as a major threat to their ability to manage tenancies effectively. Additional concerns include reduced profitability (70%), rising tax burdens (65%), and capital gains tax increases (55%).
One landlord voiced their frustration: “I’m a decent landlord and provide a nice flat that is decorated to a good standard. From 2025, landlords will have no protection. This is my pension and I need the same protection as tenants.” Another echoed the sentiment, stating, “There is now no incentive to let properties. The reward was marginal for a long time but is less than that now, so it is not worth the risk, effort, and expense.”
Rising stress levels among landlords
More than half of landlords surveyed (51%) reported that being a landlord has negatively affected their health and wellbeing over the past 12 months. Many are feeling the financial strain, while others worry about the long-term viability of their property investments.
SpareRoom’s Hutchinson warned, “While common-sense rent reforms will offer tenants greater protection, there is neither support nor incentives for landlords, and nothing in place to protect the market from volatility.” Without a more balanced approach from the government, he predicts continued instability in the rental sector, making it even harder for tenants to find suitable homes.
With fewer landlords in the market, rental demand is expected to remain high, pushing prices upwards and reducing tenant choice. Unless policymakers take decisive action to support landlords alongside tenants, the UK rental market could be heading for a supply crisis.
