Published Sun, Jul 19, 2026 · 06:05 PM
LANDLORDS in the UK have been feeling the squeeze for a decade. For many, new legislation designed to strengthen the rights of tenants is the final straw.
Evidence is growing that smaller landlords in particular are exiting the business and selling up. Nowhere is the trend more pronounced than in London, where owners of buy-to-let properties are finding it harder to turn a profit after a pileup of tax, mortgage and regulatory pressures since 2016.
In London, there were 5 per cent fewer rooms available to rent in the second quarter than a year earlier, according to data from SpareRoom. “For the first time in a few years we’ve seen supply constrict, and we think that’s down to landlords’ lack of confidence around the Renters’ Rights Act (RRA),” said Matt Hutchinson, a spokesperson for the platform connecting landlords and tenants.
The fall – echoed in several recent surveys – coincided with Labour’s flagship legislation that took effect on May 1, a moment hailed by ministers as the biggest upgrade to tenants’ rights in a generation. Under the law, which applies to England only, landlords can no longer evict tenants without a valid reason, fixed-term agreements are replaced by indefinite rolling contracts and tenants can leave at any time by giving two months’ notice. It also sets limits on rent hikes and deposits, and bans competitive bidding above the advertised rent.
While welcomed by England’s 11 million private renters, landlords complain the new rules have made the business of renting out property even less attractive. The risk, critics say, is that tenants ultimately pay a price as fewer available properties pushes up rents and hard-pressed landlords keep maintenance to a minimum. Investors expect no reprieve under new prime minister Andy Burnham, who backed calls for a freeze on private-sector rents when he was the mayor of Greater Manchester and has urged tougher action against rogue landlords.
For two decades, Britain’s buy-to-let market boomed. Attractive rental yields, easy money and light-touch regulation made property a way to augment pension savings, helping drive prices higher in the process.
Since then, however, it has been an uphill struggle for landlords with the Renters’ Rights Act just the latest in a series of setbacks. They include higher borrowing costs, increased taxes, reduced reliefs and expensive new energy-efficiency requirements.
The RRA “is the final straw for many landlords who are just too nervous about it”, Jeremy Leaf, an estate and lettings agent based in north London, told Bloomberg. Their chief worry is that the end of no-fault evictions, alongside a backlog in the court system for eviction cases, makes dealing with rent arrears or anti-social behaviour by tenants more difficult.
Estate agent Savills estimates that 30 per cent of homes put up for sale in London in the year to March were formerly buy-to-lets, with almost 700 listings a day across the UK. The exodus appears to have continued since then.
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Rents rose to a record in the second quarter as the number of available rental homes dropped year-on-year for the first time since 2022, according to Rightmove. Zoopla said new rental supply fell across most regions of the country last month. The Royal Institution of Chartered Surveyors painted a similar picture, warning of “constrained” choice for tenants.
Buy-to-let accounted for 13.8 per cent of outstanding mortgage debt held by individuals in the first quarter, the smallest share for 12 years, according to the Bank of England. Earlier this month, research company Molior London blamed landlords selling up for undercutting new build sales and discouraging new development.
Small landlords are being hit hardest by the increased burden of legislation, which includes fines of up to £7,000 (S$12,134) for breaches of the rules.
“If you’re a small landlord, you won’t keep up with the regulation, and the penalties for failing to comply are colossal,” said Alex Shinder, who rents a dozen properties to around 50 tenants in the north London districts of Camden and Islington.
One response is hiring an agent to manage the risk, and SpareRoom has seen an uptick in rental property advertised by agents as opposed to landlords or housemates. Frightened landlords are trying to ensure they do not “fall foul” of the rules, Hutchinson at SpareRoom said. Another response is converting rental units to Airbnbs, he said.
The pivot from renting to selling has put pressure on apartment prices and caused rents to harden. Official figures show the average monthly private-sector rent stood at a record £1,383 in May, a 20 per cent increase in just three years. Earnings have struggled to keep pace, leaving the average household spending at least a third their income on rent and much more in London.
While the RRA introduced safety and security for tenants, Hutchinson said, “what it hasn’t really done is address affordability”.
Landlords that survive are more likely to be institutional investors that can better absorb the costs and risks than their smaller peers. Some warn that international buyers are already looking elsewhere.
“Everybody’s slowly pulling market money out of the UK,” said Ashley Osborne, founder of a real estate firm that works across London and the United Arab Emirates. “What you’re going to see happen is that those who can sell will sell, and they will redeploy that capital overseas.”