"Flipping has its advantages and requires a different skill set than is needed for a vanilla BTL, as it carries greater risk. However, a greater reward awaits if it’s pulled off successfully"
- Bob Singh - Chess Mortgages
Smaller landlords are a dying breed, systematically exterminated by successive governments over the last decade via punitive tax hikes, stricter lending criteria, and endless changes to rules and regulations.
Later this year, the Renters' Rights Bill is expected to become law, sometime between October and December, after receiving Royal Assent and a commencement date being set. Many predict that this will act as a further catalyst for thousands of smaller landlords currently on the fence about their future in property.
However, are they likely to exit completely, reduce their portfolios, or move into other areas of property investment, such as property flipping - which could potentially kickstart an increase in the number of homes bought and sold within twelve months?
Why smaller landlords are leaving
Of those who lack confidence in the market, the top three concerns are the Renters’ Rights Bill (88%), the end of Section 21 (75%), and reduced profitability (70%).
Renters’ Rights Bill: The long-awaited legislation is currently moving through Parliament and aims to enhance tenant protections by abolishing no-fault evictions, capping rent increases, and introducing a new ombudsman and national landlord register. While tenants welcome these changes, many landlords view them as reducing their control and increasing operational risks.
Section 21: The threat of ending Section 21 no-fault evictions is one of the biggest drivers behind landlords exiting the rental sector. Without Section 21, landlords will have to rely on Section 8, which requires specific legal reasons (e.g., rent arrears, anti-social behaviour, breach of contract). These cases can be hard to prove and frequently get delayed in court, which is already severely backlogged.
Many landlords feel that without the quick route of Section 21, they could remain in legal limbo, stuck with bad tenants, unable to sell, and haemorrhaging money.
Reduced profitability: Rising mortgage interest rates and increased taxation (particularly Section 24) have squeezed landlords' profit margins. The cost of compliance with new regulations, such as energy efficiency standards and rising operational costs and fees has added to the financial burden. Many landlords are discovering that the maths no longer works: the rental income doesn’t justify the risk, hassle, or capital tied up.
Reducing and diversifying portfolios
Landlords who are actively scaling back their property portfolios are using a variety of strategic and tactical methods, including cherry-picking properties such as low-yield units, properties with high maintenance costs, and those in areas with falling demand or upcoming licensing burdens to sell off first. Others are selling properties with sitting tenants to other landlords, restructuring into limited companies, or shifting to holiday lets or short-term rentals.
What this means
As small landlords exit, institutional investors, large property management companies, and build-to-rent developers are rapidly filling the void as they have the scale to absorb costs and navigate regulations more efficiently.
As a result, thousands of buy-to-let properties are hitting the market, many of them tired or dated, needing cosmetic work, energy upgrades, or modernisation - creating value-added opportunities ideal for flipping.
Conditions are improving for flipping
As house price growth eases, conditions are increasingly favouring flippers who are looking to buy low, refurbish, and sell into a more stable or recovering market in 12–18 months. Build and material costs are also starting to stabilise or even fall slightly post-COVID/high-inflation years, making renovation margins more attractive again, especially for light refurb projects (kitchens, flooring, cosmetics, etc.).
In addition, some specialist lenders and bridging finance firms are actively pushing refurb-to-sell mortgages and short-term finance, with many now favouring flippers over buy-to-let landlords, who face tighter affordability checks and regulatory headwinds.
While conditions for a flipper’s market are improving, with more opportunities, lower entry prices, and higher demand for quality homes, it won’t be easy or risk-free.
Expert insights
As part of our research into what is likely to happen to smaller landlords, we asked property professionals for their thoughts:
“Smaller landlords have faced a relentless wave of tax and regulatory changes, making traditional buy-to-let far less attractive,” explains Pete Mugleston, mortgage advisor & managing director at Online Mortgage Advisor.
“As margins tighten, it’s no surprise many are turning to short-term flipping as a quicker, simpler way to see a return, especially without the burden of tenant management or ongoing compliance. But this shift has serious consequences for the private rental sector. As more landlords exit, rental supply drops, pushing rents even higher.
"Buy-to-let can still work for non-portfolio landlords, but the system needs reform. Without meaningful support, we risk losing the very landlords who help keep the rental market functioning.”
Emma Jones, managing director at Whenthebanksaysno.co.uk, added: “Endless regulation and tax hikes are forcing smaller landlords to rethink their future. Some may turn to flipping for quicker wins, but it's not a fix-all — and we’re unlikely to see a full-blown wave.
"Flipping’s risky, capital-heavy, and not for the faint-hearted. If more landlords sell up, rental supply shrinks, rents rise, and tenants get fewer options. The private renting sector risks becoming less diverse, with the big players hoovering up what’s left while everyday landlords are pushed out.”
Bob Singh, founder of Chess Mortgages, said: “With the relentless assault on landlords via fiscal policies and legislation, it’s no wonder they’re considering alternative ways to generate income in property investment."
"Buy-to-lets no longer make sense for some, given the huge entry costs and relatively high interest rates. Flipping is now amongst the options being explored by many, in conjunction with HMOs and social housing, where higher and faster returns are possible."
"Flipping has its advantages and requires a different skill set than is needed for a vanilla BTL, as it carries greater risk. However, a greater reward awaits if it’s pulled off successfully."
"Flipping is best done in an SPV that does only flips. This may avail greater tax advantages and boost profit margins. In addition, the SPV can be sold to an investor, who acquires the shares and pays just 0.5% SDLT. Unfortunately, the number of lenders that assist borrowers in this type of transaction is woefully inadequate and represents a huge opportunity to enter this market.”
Giray Boran, managing director at BLG Capital, comments: “While some investors are turning to short-term flips in response to rising costs and stricter regulations, this approach risks further depleting supply in an already pressured private rental market, particularly as smaller landlords continue to exit.”
Robin Edwards, a property buying agent at Curetons, said: “We’ve already seen landlords exiting the market in response to financial and regulatory pressures and if more investors opt for short-term flipping over long-term letting, tenants will bear the brunt. Fewer rental properties mean less choice for tenants and even greater pressure on rents.
"As for whether buy-to-let is still viable for non-portfolio landlords: the reality is that for those with just one or two properties, the margins are getting tighter and the risks are increasing. Larger, well-capitalised landlords can still make the numbers work through economies of scale but for those without deep pockets or the ability to offset tax liabilities, the model is becoming much less appealing.”
Summary
The UK rental market is becoming more professional and institutional, with many smaller landlords choosing to cut their losses ahead of the Renters' Rights Bill.
While flipping properties can work, it is not a natural next step for the majority, and likely favours those who are already hands-on and have spare capital or access to finance. Most small landlords are unlikely to fit into this demographic, not only due to lack of capital, but because they’re time-poor and don’t have experience with renovations or quick turnarounds.
Smaller landlords are more likely to exit rather than evolve, especially if they view property as a legacy asset, not an active business.
A dying breed indeed.
