- Rental supply in the UK has fallen to record low levels
- Smaller, often mortgage-free landlords are selling up
- Regulatory burden, not interest rates, is driving exits
The UK private rented sector is facing a deepening supply crisis as rental listings fall to record low levels, with a growing number of landlords choosing to exit the market, according to new analysis from LandlordBuyer.
Data from the firm shows that rental supply is shrinking faster than new homes are being added to the private rented sector. Around 35 per cent of privately rented homes are held on buy-to-let mortgages, suggesting the majority of landlords are either mortgage-free or carry limited debt. This, analysts say, lowers the financial barriers to exit and allows landlords to sell more quickly when conditions change.
Industry surveys cited in the analysis show that 34 per cent of letting agents have reported a rise in landlords selling their properties. Smaller, independent landlords — often owning one or two homes — are leading the sell-off.
Not an interest rate story
While higher interest rates have dominated debate around landlord exits, the data suggests borrowing pressure is not the main trigger for many sellers. Mortgage-free landlords are less exposed to rate increases, reducing the urgency to hold on to rental income.
Instead, decisions to leave the sector are increasingly linked to regulatory complexity, changes in taxation, rising compliance costs and the introduction of the renters rights act 2025. Analysts say the administrative burden has become a key concern, particularly for smaller landlords without scale.
Jason Harris-Cohen, managing director of LandlordBuyer, said the trend does not reflect distress selling. He said many landlords are financially secure but are choosing to exit because the sector no longer feels predictable or proportionate in terms of risk and return, as quoted in a news report.
He added that years of layered regulation and policy changes, often introduced without long-term clarity, have made continued participation less attractive for smaller landlords.
Fewer homes, fewer choices
Across many parts of the country, demand for rental homes continues to outstrip supply, limiting options for tenants and placing upward pressure on rents. The latest data suggests this imbalance is being driven more by a sustained reduction in available rental stock than by a sudden rise in tenant demand, particularly in high-demand areas.
Harris-Cohen said when experienced landlords leave the sector, those homes do not always return to the rental market. Instead, they are often sold to owner-occupiers, further reducing rental availability.
Without policy measures that support rental supply alongside tenant protection, analysts warn the private rented sector could continue to contract, making affordability and access more challenging for renters across the UK.
