The UK’s private rental sector is under growing pressure as tenant demand remains exceptionally high while landlords continue to exit the market, leading to concerns over escalating rent prices and dwindling availability.
Landlords selling up as demand surges
New research from both the National Residential Landlords Association (NRLA) and Goodlord highlights a worrying trend: fewer rental properties are available, and many landlords are selling their properties due to regulatory uncertainty and tax burdens.
A report by the NRLA, conducted by Pegasus Insights, found that 77% of landlords saw strong tenant demand in the final months of last year. However, a significant portion—one in five—had sold at least one rental property recently, further squeezing supply.
Goodlord’s research paints a similarly bleak picture. Their survey found that a quarter of landlords intend to reduce their portfolio by selling off properties. A separate poll of letting agents revealed that three-quarters of them had landlord clients actively considering sales.
Oli Sherlock, Director of Insurance at Goodlord, said the findings reflect increasing “confusion and concern” among landlords, particularly as the Government’s Renters’ Reform Bill moves closer to becoming law. “The uncertainty in the market is driving landlords away, which is the opposite of what’s needed to stabilise rents and ensure tenant security,” he said.
Tax policies discouraging investment
Landlords are increasingly critical of the Government’s taxation policies, which they argue are disincentivising investment in rental properties at a time when demand is surging.
Ben Beadle, Chief Executive of the NRLA, warned that tax changes are discouraging landlords from staying in the sector. “Tax hikes which penalise those wanting to provide such homes need to be scrapped,” he said.
In recent years, landlords have faced significant financial hurdles, including the additional 3% stamp duty surcharge on buy-to-let purchases, the phasing out of mortgage interest relief, and increased capital gains tax liabilities. These measures, Beadle argues, are making it harder for landlords to remain profitable, pushing many to sell their properties instead of renting them out.
Renters’ rights bill ‘undermining confidence’
The looming Renters’ Reform Bill is another major concern for landlords, with many worried that it will erode their ability to manage tenancies effectively. While the Government claims the bill will enhance tenant security, landlords argue it could exacerbate rental shortages.
“Labour’s focus on ‘improving security for tenants’ will mean little if tenants cannot find properties to rent,” Beadle said. “Without change, the situation is only going to worsen. We need policies that genuinely support those who provide decent-quality homes to rent.”
To prevent further deterioration in the rental market, the NRLA is calling for several urgent reforms. These include rolling back the stamp duty surcharge on landlords, unfreezing the Local Housing Allowance to reduce tenant arrears, and streamlining the court system to ensure landlords can regain possession of their properties when necessary.
