The UK’s rental property market is getting into a interval of transformation, with hundreds of landlords anticipated to go away the market in 2026 after battling excessive inflation, new laws and better taxes.
In 2025, roughly 93,000 buy-to-let landlords exited the market, and property buying agency LandlordBuyer thinks this was solely the start.
With new taxes to cope with and far stricter rental legal guidelines, LandlordBuyer believes that this stream of exits is about to hurry up in 2026, somewhat than decelerate.
Landlords Plan To Downsize Or Exit Fully
The landlord exodus exhibits no indicators of slowing. Knowledge from a latest English Personal Landlord Survey, revealed that:
- 31% of landlords plan to cut back the scale of their portfolio, and
- 16% of landlords mentioned they’re contemplating promoting all their rental properties inside the subsequent two years.
And for a lot of, this information isn’t a lot of a shock. In reality, landlords appear to have been hit with the right storm as of late, beginning with The Renters’ Rights Act and ending with a rise in landlord taxes introduced within the autumn finances.
The consequence? Proudly owning rental properties is turning into far much less fascinating within the UK.
Jason Harris-Cohen, Managing Director at LandlordBuyer, feedback:
“The sector is reaching a important tipping level. The 93,000 landlords who left in 2025 have been simply the beginning. What we’re seeing now’s a wave of personal landlords, notably these with one or two properties, selecting to exit earlier than authorized, monetary or regulatory dangers improve additional.”
Renters’ Rights Act Places Energy Again In The Fingers Of Renters
The Renters’ Rights Act, which got here into impact only a few months in the past, abolished Part 21 ‘no-fault’ evictions, making it more durable for landlords to take away tenants from their properties – even when they aren’t paying hire.
While the transfer was celebrated by some, many landlords have mentioned it makes renting out their properties riskier, particularly because it provides them little rights on the subject of evicting tenants in the event that they don’t pay hire.
This has been made much more tough by tighter native authority pointers like EPC guidelines and licencing, including extra value and complexity to an already tough scenario.
And on the subject of the impression, Landlordbuyer says it means extra landlords at the moment are promoting with tenants in situ to keep away from the lengthy eviction course of.
They commented “At LandlordBuyer, we’re seeing extra landlords than ever trying to promote tenanted properties shortly, with out happening the eviction route. Promoting with tenants in place is turning into the norm, not the exception.”
Rising Taxes Add Even Extra Strain
As of the autumn finances, alongside higher renters rights, landlords additionally need to pay extra taxes on rental revenue.
From April 2027, rental revenue will probably be taxed below new, separate property revenue tax brackets, with charges 2% larger throughout all bands:
- 22% primary fee (up from 20%)
- 42% larger fee (up from 40%)
- 47% extra fee (up from 45%)
Whereas landlords do get £1,000 of their earnings tax free, this variation, alongside the freezing of revenue tax brackets, imply extra landlords are compelled into paying larger taxes.
Alongside this, different prices to landlords embody the brand new mansion tax, payable on properties valued over £2 million. With the common rental yield within the UK sitting at 5.8% (Zoopla), it’s no surprise that so many are pulling their cash out to spend money on rather more secure avenues.
Robin Edwards, a property shopping for agent at Curetons commented “As a property shopping for agent working carefully with landlords throughout the UK, it’s clear that the personal rental sector has grow to be far much less engaging than ever in the previous couple of years. The problem definitely isn’t an absence of demand, rental costs stay excessive and demand from tenants is exceptionally sturdy. The primary situation is the huge improve in prices, in addition to new draconian guidelines and laws for personal landlords.
“Successive tax adjustments have massively eroded profitability, most notably the elimination of full mortgage curiosity reduction, which has turned many once-viable rental properties into poor investments, notably for higher-rate taxpayers. On the similar time, stamp obligation will increase and better rates of interest have sharply elevated borrowing prices, whereas rents, regardless of rising, usually haven’t stored tempo with the soar in month-to-month bills that landlords now need to pay.
“On prime of this are the ever-expanding guidelines and laws. Nicely-intentioned reforms round vitality effectivity, tenant rights and security have created loads of uncertainty and considerably extra prices. Many landlords are additionally very uneasy in regards to the new Renter’s Proper Invoice that weakens their capacity to regain possession, particularly when coping with non-paying or problematic tenants.
“For small, personal landlords particularly, property now feels much less like a long-term funding and extra like a closely regulated enterprise with quickly diminishing returns. Confronted with rising compliance prices, larger taxes and extra engaging various investments, it’s not shocking that many are selecting to exit the sector in 2026 and money in whereas property costs nonetheless stay comparatively sturdy.”
The Influence On The Rental Market
With personal landlords trying to exit, the availability of personal leases is anticipated to shrink, placing additional strain on tenants in areas like London, Bristol, and Manchester.
Lease inflation, already working above wage development, can also worsen if extra landlords go away the sector with out being changed.
A Rental Sector In Motion
While many will agree that supporting renters rights is one thing to be celebrated, others will say that these reforms have gone a step too far, leaving landlords with little area to maneuverer.
As landlords need to sustain with tighter laws and better taxes, it appears to be like like 2026 goes to be a transformative 12 months for the rental sector.
Did the autumn finances push them a step too far? We are going to wait and see.
