A growing number of landlords are preparing to exit the private rental sector (PRS), according to new data from Pegasus Insight, raising fresh concerns about the future availability of rental housing across the UK.

The quarterly Landlord Trends report from the mortgage market research firm paints a stark picture of a sector in retreat. It found that 37% of landlords intend to sell at least one property in the next 12 months, compared with just 6% who plan to buy. This is nearly double the proportion of landlords who were planning to sell at the beginning of 2022, when the figure stood at 20%, and represents a significant shift in sentiment among investors.

More than a fifth (22%) of landlords have sold property over the past year, but only 6% made a purchase during the same period. Notably, just 28% of these sales remained within the PRS, with the majority of disposals going to owner-occupiers—especially first-time buyers, who accounted for nearly a third of all known purchasers.

The trend appears most pronounced among landlords with four or more mortgaged properties. While 11% of this group purchased a property in the last 12 months, almost three times that number (31%) sold one. Overall, 58% of landlords now say they have an exit timeline in mind, and only 22% report no intention to sell.

WARNING SOUND

Mark Long, founder and director of Pegasus Insight, described the figures as a wake-up call for policymakers.

“These results suggest a large cohort of disillusioned landlords, worried about the future of the sector and further demands the government might place on them,” said Long. “Our research confirms that many landlords are deeply concerned about the impact of the Renters’ Rights Bill, energy efficiency requirements and a potential hike in Capital Gains Tax on buy-to-let property.”

He warned that even though some sales will be absorbed by other landlords or reflect portfolio trimming by larger investors, the net effect would be a contraction in rental supply. “As supply falls while demand remains strong, rents will inevitably rise yet further, hurting tenants,” Long said.

STRONG DEMAND

The data comes despite an otherwise stable picture for the sector’s fundamentals. Tenant demand remains robust, with over 70% of landlords reporting strong or very strong demand in their area. Rental yields are also holding steady at an average of 6.3%, just 0.2% below the decade high seen in late 2024.

Landlord profitability has shown resilience, too, recovering after a temporary dip in 2023 when mortgage rates first began to climb. Many landlords are still achieving consistent returns, underpinned by high demand and rising rents.

However, these positives appear insufficient to offset growing unease about regulatory changes and taxation. The introduction of more stringent energy efficiency rules, uncertainty over tax policy, and heightened compliance burdens have all contributed to the prevailing mood of caution.

Long concluded with a call for government intervention: “The government must wake up to the dangers of a shrinking PRS and change its approach to the landlords who provide homes for 19% of the UK’s population. Now is the time for policymakers to consult with the industry on ways to support landlords and encourage further investment in the PRS, before it is too late.”