Buy-to-let landlords are heading for the door, despite huge rental demand driven by high mortgage costs. Red tape and tax are being blamed for the exodus, which is forcing a chronic shortage of homes for tenants.
The period of relatively cheap mortgages for both landlords and homebuyers immediately following the 2008 financial crisis helped to fuel a boom in buy-to-let house purchases by those in a position to take on more debt. Despite lower rates, tighter borrowing rules ruled out other would-be landlords, as well as potential homeowners, and some sizeable portfolios were built, with several becoming incorporated businesses.
Now the party seems to be over. Although first-time buyers’ monthly mortgage payments are around 60% higher than five years ago, far outstripping pay growth of 27%, the healthy rental market that has developed among those who are therefore forced to be tenants is of little interest to many landlords.
This week the Renters’ Rights Act finally became law. Dubbed a “seismic shake-up of the private rented sector” by the National Residential Landlords Association, for more than a year and through various delays it has caused huge uncertainty in the market. Aimed at delivering a fairer deal for renters, not least in respect to evictions, the Act-to-be led landlords to hold off essential property improvements ahead of clearer rules. They had already faced higher operating costs as a result of tighter energy efficiency requirements. These two factors have left several properties badly maintained, sometimes to the point of uninhabitability, or even non-compliant.
Then there are tax issues. A poll of 50 leading mortgage brokers by lender Landbay has discovered that three quarters report their portfolio landlord clients getting ready to offload some or all their properties if the Chancellor applies National Insurance (NI) tax to their rental income. A quarter of brokers surveyed said their landlords were getting ready to ‘slim down’ their portfolios if they are required to pay NI, while 45% said they would sell all of their properties.
Agent Rightmove says one in three landlords considering leaving the sector as new rental listings fall to their lowest level this year. Its latest Rental Trends Report shows new rental listings are now just 1% higher than they were last year – the lowest this figure has been in 2025 – while the total available rental stock remains 23% below pre-pandemic levels.
The dynamics of buy-to-let are set to remain problematic for the foreseeable future. Operating as a residential landlord is likely to get tougher, even with lower funding rates and the supply-demand imbalance in the UK housing stock easing when Labour’s building programme accelerates.
If you are a debt-laden landlord considering unwinding residential portfolios and company structures, contact us to take early professional advice for a managed process with an optimal outcome.
This article is written by Alice Fanner, Manager at Buchler Phillips, an independent boutique firm, with an impeccable Mayfair London heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.