Landlords are leaving the market in their droves as a host of factors squeeze the buy-to-let (BTL) market.
Around 44,000 BTL homes were sold by landlords across the UK between the start of July and mid-September, according to property data company TwentyCi.
Per day, 562 homes left the sector on average, the highest rate since 2016, the analysis suggested.
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Separately, a recent report by trade body the National Residential Landlords Association (NRLA) found 60% of single property landlords are no longer sure they will be in the market by the end of 2027.
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The report said rising costs, government policy and an increasing administrative burden were dampening the mood across the market.
Chris Norris, chief policy officer at the NRLA, said: “Successive governments have assumed that landlords can permanently absorb costs and sustain losses whilst remaining in the market.
“This approach has led to one standout outcome: a reduced supply of available rented accommodation, narrowing choice for tenants across the private rented sector.”
There are still opportunities in the BTL market though, including for professional landlords willing to take a hands-on approach.
Why are so many landlords leaving the market?
For years, the buy-to-let market typically offered capital growth and a steady income that could outmatch any savings account – the Bank of England base rate stayed below 1% between 2009 and 2022.
But landlords have been hit with a number of legislative changes over the last 10 years which have made their lives harder.
From April 2017, tax relief that individual BTL landlords could claim on their mortgage interest was slowly eroded through section 24 of the Finance Act 2015. When mortgage rates started rising in 2022, this policy really started to hit.
Before the changes, landlords could deduct 100% of mortgage interest from rental income before paying tax.
However, between 2017 and 2020 landlords gradually had this tax relief reduced to nothing and they now get a tax credit of 20% on mortgage interest payments instead. The reduction in this tax relief has led to higher tax bills for landlords.
Suzanne Smith, former solicitor turned landlord and author of The Good Landlord Handbook, said: “If you were only paying 2% on a mortgage and you couldn’t offset all your financing costs against the rental income, it wasn’t a big issue for landlords.
“But with interest rates going up and people paying 5% or 6%, it has had more of an impact.”
More recently, the introduction of the Renters’ Rights Act, large parts of which came into effect in May, have made the logistics of being a landlord in England much harder.
This includes making it harder for landlords to evict tenants following the abolition of section 21 or so-called ‘no fault’ evictions.
Landlords also can’t say no to a tenant requesting to have a pet live with them and can only request one month’s rent in advance.
Meanwhile from April 2027, higher rates of tax will apply to income made from property in England, Wales and Northern Ireland. The basic rate will be 22%, the higher rate 42% and the additional rate 47%. Currently, income tax rates apply.
David Fell, lead analyst at estate agent Hamptons, said: “Each of these things on their own are not necessarily a deal-breaker for landlords, but, collectively, I think it’s a lot harder to make money than it was two years ago."
Are there still opportunities for landlords?
Despite the challenges, there are still opportunities for landlords in the BTL market.
Smith, who has four rental properties, said she focuses on getting families into her properties for long-term lets, which is one way to avoid periods without any rental income.
She also said long-term lets allow her to build up trust with tenants over time.
She properly references prospective tenants to make sure they can keep up with rent, as well as ensuring her properties are suitably renovated and have an EPC rating of at least C.
“People still need homes, and not everybody can afford to buy a home, and there’s not enough social housing,” Smith said.
“Tenant demand is what makes this asset resilient, because people need somewhere to live and [if] you can provide a good service, provide this need, and comply with the rules, then you’ll be fine.”
Research suggests other landlords are taking this hands-on approach. Polling by BTL lender Rely Mortgages found 55% of landlords are spending more time thinking about the tenant experience while 59% have spoken directly to tenants to better understand their needs.
Landlords could find joy in other parts of the housing market too.
Recent research by The Cumberland Building Society found 88% of mortgage brokers had seen an increase in holiday let mortgage enquiries over the previous 12 months.
A holiday let is different to a BTL as it’s used to offer shorter-term, rather than long-term, stays.
The benefit is that you can make money from holidaymakers staying in the property, potentially realise a capital gain when you sell up down the line and also have a place to stay if you need a holiday.
But there are drawbacks, for example you’ll generally need a bigger deposit for a holiday let than a BTL and may have to cover cleaning costs in between each guest.
Is it still worth being a landlord?
If you’re looking at BTLs from a purely financial perspective, you may find better gains elsewhere.
Analysis by wealth manager Quilter looked at how much you could have made from BTL versus the stock market over the last 20 years.
Its research suggests the net profit on a rental property bought for £154,927 in June 2006 would be £191,619 over 20 years. This is based on, as of June 2026, a capital gain after tax and costs of £83,170, and includes house price growth and net rental income of £108,448.
Over the same 20-year period, if someone had invested £154,927 into UK equities in June 2006, their investment would now be worth £592,130, according to Quilter, a gain of £437,203.
If someone had invested the same amount into global equities it would be worth £1,200,219, making for a capital gain of £1,045,292. Both these calculations are based on no deductions for fees and tax.
Investing comes with risk and returns are not guaranteed.
There is also the added financial and administrative burden that comes with being a landlord in the current market.
In this context, Smith said BTL is not something landlords can simply treat as passive income anymore.
“Anyone who thinks it is passive income should sell up when their tenants leave because being a landlord carries a lot of risk,” she said. “I recently had a six month void [on a property] because I was doing a kitchen and other work…it’s a lot more risk being a landlord than it is putting money in a bank.”
She added: “I think that the people who will do well in the future are those who treat it as a business. It means keeping proper records…doing repairs properly, using an accountant and of course providing a great service to tenants.”
What major changes do landlords need to deal with in the current market?
Renters’ Rights Act
The Renters’ Rights Act has added an administrative burden on landlords and local authorities now have the capacity to issue fines to those who break the rules.
However, there are ways to ease the logistical burden and ensure you’re following the new legislation.
Kim Lidbury, group director at trade body for estate agents Propertymark, said keeping accurate records was “particularly important” under the new rules and property management software could help with this.
New EPC ratings from 2030
Landlords will need to ensure rental properties have an EPC rating of C or above by 2030 under the Minimum Energy Efficiency Standard (MEES).
Landlords will also need to meet this C rating under a new framework that factors in multiple metrics instead of one. This new framework is set to be rolled out from the second half of 2027.
While the framework is changing, it’s worth getting ahead and trying to ensure your property meets a C rating under the current framework.
Making Tax Digital
HMRC is rolling out Making Tax Digital (MTD) for income tax in phases, with landlords earning over £50,000 a year from rental income now having to use the new system.
Landlords with an annual turnover of £30,000 or more have to start using the system from April 2027 while landlords with a yearly turnover of at least £20,000 will be affected from April 2028.
Lidbury said: “Those affected by Making Tax Digital should also ensure they have appropriate digital systems for maintaining accurate financial records.”
