Changing regulations and taxes are by far the leading reasons cited by landlords intending to leave the private rented sector (PRS) during the next two years, according to a report by the Deposit Protection Service (DPS).

The protector of rental deposits surveyed over 1,200 landlords about their views on the PRS as well as their intentions for their properties.

The report, The Private Rented Sector Review, states that 47% of respondents are considering selling some or all of their portfolio, down two percentage points from 49% in May.

However, the proportion of respondents who said that their decision to sell was directly influenced by changes or proposed changes to legislation or regulation was 89%: up four percentage points since May this year (85%).

When asked to say how influential each one of the key legislative or regulatory changes behind their decision to sell up were, 94% said that proposed reforms to Section 21 evictions were influential: up five percentage points since May 2024 (89%).

Meanwhile, 91% said the Renters Rights’ Bill — previously the Renters’ (Reform) Bill —was influential in their decision to sell: up six percentage points on May 2024 (85%) and an increase of 10 percentage points since August 2023 (81%).

The same proportion (91%) said that capital gains tax changes had influenced their decision, an increase of eight percentage points since May (83%).

Matt Trevett, managing director at the DPS, said: “The proportion of landlords planning to exit the PRS altogether has remained largely static over the last few years, and the well-publicised shortage of rental properties continues.

“Our report shows that the legislative and taxation landscapes are becoming greater influences on landlords’ thinking, with just under 90% citing laws or tax as a key reason for their intended departure.

“Rising materials costs — which have a direct impact on property maintenance prices — and the cost of buy-to-let mortgages are also affecting respondents’ plans.”

SELLING LANDLORDS

Since May the proportion of landlords looking to sell rental property, who said that their decision took place in the context of less potential return after tax, increased by four percentage points from 72% to 76%.

30% of landlords who said they intend to sell reported that concerns about declining property values had influenced their decision: up 9 percentage points since May this year (21%) but lower than the 40% who expressed the same concern in August 2023.

Results also showed that the cost of mortgages is a lessening concern for respondents, with 46% saying they are worried about it in the most recent survey compared to 51% in May 2024 and 58% in August 2023, falls of 5 and 12 percentage points respectively.

24% of respondents plan to sell all their properties during the next two years, up four percentage points since May this year (20%) and two percentage points since August 2023 (22%).

The study also found that 23% of respondents said they were planning to sell just some of their properties: a fall of six percentage points since May 2024 (29%).

INVESTOR TYPES

61% of respondents said they had purchased all their properties to specifically use as rentals, while 30% had either inherited the property or had bought it originally as their main home.

Of those questioned, 57% said they owned one or two rentals, with 38% owning between three and 10.

57% said they had another primary source of income: up four percentage points from May (53%) whilst 35% said that rental income from their properties was their main source of funds.