Landlords are leaving the UK rental market at unprecedented rates, with steeper mortgage costs and tougher regulations making many decide that being a landlord simply isn’t worth it anymore.
Data shows the buy-to-let sector shrinking consistently in the past few years, as higher mortgage rates turn previously profitable rentals into loss-making properties. With confidence at record lows and one in four landlords planning to sell this year, tenants face an increasingly squeezed rental market and rising rents.
In fact, if you look at Google Trends data, we can see that demand for Buy-to-let mortgages in Jan 2025 is lower than any other January in the past 5 years.
Higher costs make properties unprofitable
A perfect storm of financial pressures is pushing landlords toward the exit. Interest rates climbing above 5% (though, they have recently fallen to 4.5%) have sent buy-to-let mortgage costs soaring, with many landlords seeing their monthly payments double or triple. The numbers tell a stark story, as mortgage arrears jumped 93% in just one year, and many mortgaged landlords are now losing money despite pushing up rents by an average of more than 9% in tax year 2023/24.
Beyond mortgages, landlords face mounting operating costs. Insurance premiums, maintenance bills and essential repairs all cost more due to inflation. While rental income has risen sharply, these gains often haven’t kept pace with expenses. Even safe 5% returns on savings accounts now look attractive compared to the work and risk of managing properties.
The situation has hit hardest for “accidental” landlords with one or two properties. Unlike large property companies, these smaller landlords often lack the financial cushion to absorb higher costs. Many who bought when interest rates were low and house prices rising steadily now find the rental market a very different place.
Government policies add pressure
Tax changes and stricter regulations keep piling up for landlords. Section 24 rules now block them from deducting mortgage interest from rental income before calculating tax. The stamp duty surcharge on buying rental properties is rising to 5%, while capital gains tax allowances have been cut sharply. These changes mean many landlords face higher tax bills even as their profits shrink.
The announcement of higher CGT rates commencing 1st April 2025 has created urgency among landlords to sell rental property before the new tax year. The Autumn 2024 budget announcement was the final straw for many, and it pushed a lot of landlords to sell before the new tax rule is in play. It’s a major catalyst for why landlords are selling property in 2025.
Increasing regulations
Looking ahead, landlords see more regulations coming. The soon to end of “no-fault” evictions will make it harder to regain possession of properties from tenants who stop paying rent. Landlords could be without any rent and paying mortgages from their own pocket for more than eight months, based on the new laws around eviction. These laws are due to be enacted in 2025, which is another major factor pushing landlords toward an exit.
Looming energy efficiency rules may require rentals to meet EPC grade C by 2028, potentially forcing expensive upgrades. More councils are also introducing licensing schemes that add fees and inspections.
The regional impact varies
The pace of landlords selling up differs markedly across the UK. Some areas face a more severe rental squeeze than others:
- London leads the exodus, with nearly one in four homes listed for sale being ex-rentals. High property values but low yields leave London landlords especially vulnerable to rising costs
- Scotland has seen a sharp rise in landlords selling due to rent controls, with investors making up 12% of sellers in 2023, up from 10% the year before
- The North East bucks the trend somewhat, with better rental yields giving landlords more breathing room. It’s one of few regions where landlords bought more properties than they sold in 2023
Regional patterns reflect local market conditions and regulations. But even in areas seeing fewer sales, like parts of northern England, new landlords aren’t stepping in to replace those leaving. The overall rental sector continues shrinking nationwide, pushing up rents as tenants compete for fewer available homes.
What’s the impact on renters?
Tenants face record rent increases as more private landlords sell their properties. The numbers paint a clear picture: average rents jumped 9% to 12% across Britain last year while available rental homes dropped sharply. Two out of three rental properties sold, end up bought by first-time buyers rather than new landlords, shrinking the pool of rental homes that are available.
The market has begun to steady slightly, with rents outside London dipping 0.2% in late 2024, the first quarterly fall since 2019. But competition for homes remains fierce. Each rental listing still attracts around 10 tenant applications on average, and the National Residential Landlords Association warns that landlords selling up poses “the single biggest challenge renters face” in 2025.
Should I sell my buy-to-let?
Your decision to sell depends on your financial position and long-term goals. Higher interest rates and potentially higher taxes, along with mounting maintenance costs, mean many mortgaged landlords now struggle to break even.
This is especially true in London and the South East, where rental yields sit at 3% to 4%. But landlords with lower mortgages or properties in higher-yield areas like the North East, where returns can top 7% to 8%, may still find their investments worthwhile.
Selling your buy-to-let property fast
Property Rescue provides a guaranteed sale option for landlords wanting a quick, hassle-free exit from the market. We handle all legal paperwork, can exchange contracts in as little as 48 hours and typically complete within two to four weeks.
With no estate agent fees, no chain risks and no viewings to arrange, we offer a straightforward alternative to traditional selling. If you are a landlord with a portfolio, we can buy it from you in one fell swoop, so you can wave goodbye to your buy-to-let mortgage payments.
We’ll even buy properties with sitting tenants, so there’s no need for you to evict anyone. If you’d be interested in a no obligation cash offer for your rental properties, learn more about how we can help you here.