According to research from Pepper Money, this would represent around 5% of England’s private rental stock. It also found that smaller landlords were most likely to leave the sector.
The lender said these decisions were prompted by the upcoming Renters’ Rights Act, which comes into effect on 1 May, resulting in reforms to the rental market and tenant rights.
Pepper Money found that most landlord exits would occur in the South East, with over 46,000 rental homes expected to leave the market, representing a fifth of all exits. In the region, 15% of private landlords plan to sell up.
The North East has the highest proportion of landlords intending to sell, with 21% of private landlords intending to do so. However, this would only account for 8% of all private rental sector (PRS) exits across England.
Pepper Money noted that these exits would impact rental prices, particularly following insight from Rightmove suggesting that the number of rental homes available is a third lower than a decade ago.
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In the South East, where rental demand is high, advertised rents average around £1,893 per month. If 46,000 homes leave the market, this could increase competition and put upward pressure on prices.
Pepper Money said rental yields could also be influencing landlord decisions, as average returns of 6% in the South East could make investments less resilient against increased regulation.
Despite lower average rents of around £946 per month in the North East, Pepper Money said the high proportion of landlords intending to sell highlighted the shift in landlord sentiment even in more affordable locations.
Pepper Money said the pressure on landlords appeared widespread.
|
Region |
Percentage of landlords planning to sell |
Estimated households exiting PRS (rounded to nearest 100) |
Percentage of total exits |
|
North East |
21% |
18,000 |
8.3% |
|
North West |
8% |
22,500 |
10.3% |
|
Yorkshire and the Humber |
10% |
18,500 |
8.5% |
|
East Midlands |
14% |
24,000 |
11.0% |
|
West Midlands |
5% |
10,700 |
4.9% |
|
East of England |
10% |
22,200 |
10.2% |
|
London |
6% |
29,200 |
13.4% |
|
South East |
15% |
46,200 |
21.2% |
|
South West |
13% |
26,800 |
12.3% |
|
Total |
— |
218,100 (rounded to 220,000 for headline figures) |
100% |
Greater pressure on small landlords
Paul Adams, sales director at Pepper Money, said the research showed how the combination of changing legislation and rising operating costs was “prompting many landlords to review their portfolios”.
He added: “As a result, an estimated 220,000 households are projected to leave the private rented sector by the end of 2026, including more than 65,000 linked to the upcoming legislative changes.
“Whilst we welcome the additional protections for tenants introduced through the Renters’ Rights Act, and the continued focus on improving standards across the private rental sector, it’s important to recognise the potential unintended consequences for supply and pricing at a time when the sector is already under pressure. These legislative changes follow a series of fiscal and regulatory shifts that have cumulatively squeezed landlord returns and altered the economics of buy-to-let investing.”
Adams said: “With just 5% of landlords buying a new rental property in the last year, and new starts in build to rent remaining subdued, it’s unlikely this exiting stock will be replenished at the same rate, meaning we could see a dip in rental dwellings this year.
“The data also points to a shift in the make-up of the sector. Smaller landlords, particularly those with just one property, are significantly more likely to leave the market as they reassess their portfolios. Larger landlords who are better equipped to absorb additional costs and regulatory requirements are choosing to remain, contributing to a gradual professionalisation of the private rented sector.”
