Nearly two-thirds of buy-to-let landlords are planning to sell at least one property within the next three years, according to a survey by landlord consultancy Property118. The scale of the exodus reflects years of mounting pressures on the sector, from higher mortgage rates and increased taxation to tightened legislation. The Renters' Rights Act, introduced in May, has made it harder for landlords to evict tenants and raise rents, adding to regulatory burdens that many regard as unsustainable.
The financial picture for those exiting the market is grim. Buy-to-let investors lost £1.15 billion in the 2024-25 tax year on residential property sales, according to capital gains tax data from HMRC analysed by Bowmore Wealth Group. This represents an increase of a third compared to losses of £870 million in the previous tax year. Many landlords who purchased during the pandemic when prices were higher now face minimal capital growth or outright losses if they sell.
House price stagnation is compounding the problem. The average UK property price stood at £298,441 in September, unchanged from a year earlier according to the Lloyds House Price Index. Performance has been particularly weak in major markets: London prices fell by 2.2 per cent to £531,548, while South East prices dropped by 2.1 per cent to £380,829. This weakness reflects the impact of sustained high mortgage rates and broader economic uncertainty.
Industry figures paint a picture of growing frustration with the sector. Harry Goodliffe of broker HTG Mortgages said successive governments have transformed buy-to-let into a compliance-heavy endeavour with substantial tax obligations, predicting a slow, steady exodus rather than a rush to sell. David Floyd of Bowmore Wealth Group noted that investors are increasingly comparing buy-to-let returns to high-yielding government bonds and global stock market growth, questioning whether property still merits their capital.
The prospective supply of homes could present opportunities for those remaining in the sector. Portfolio landlords may gain chances to acquire properties at lower prices as smaller operators exit. Mark Alexander, founder of Property 118, suggested that selling need not be negative, arguing it could strengthen remaining portfolios when part of a considered strategy accounting for costs and tax implications.
For borrowers and renters, the mass exit of landlords from the buy-to-let market could affect the availability and pricing of rental properties, whilst property investors face diminishing returns and increased compliance costs making residential lettings less attractive than alternative investments.