"The overall direction of travel still points to a shrinking PRS. When a substantial proportion of landlord sales are going to first-time buyers or other owner-occupiers, it inevitably reduces the pool of homes available for rent"
- Mark Long - Pegasus Insight
Fresh research indicates that landlord disposals are continuing to reduce the private rented sector in the UK property market, even though a portion of properties sold remain within rental ownership.
Data from Pegasus Insight’s Landlord Trends Q4 2025 report shows that more than one in four landlords who sold a property during the past year did so with tenants still living in the home. In these cases, landlords typically sold an average of 1.8 properties with sitting tenants.
The findings suggest that while some housing stock remains within the private rented sector when landlords sell, a significant share ultimately leaves the market and moves into owner occupation.
What the data shows about landlord disposals
Pegasus Insight’s analysis highlights several key trends in landlord sales across the UK property market:
More than 25% of landlords sold properties with tenants in place
Landlords who did so sold an average of 1.8 tenanted properties
30% of properties sold by landlords were purchased by another landlord
34% were bought by first-time buyers
29% were purchased by other residential buyers
The figures indicate that a portion of landlord sales simply transfers homes between investors. However, the majority of transactions still appear to move properties out of the rental market.
When homes are purchased by first-time buyers or other owner-occupiers, they typically leave the private rented sector altogether.
Impact on rental supply in the UK property market
The data adds to wider evidence that rental supply in the UK property market is tightening.
Although the recycling of properties between landlords helps retain some stock within the private rented sector, the balance of transactions suggests a gradual contraction in the number of available rental homes.
For landlords and investors, this shift reflects a market where some owners are exiting while others continue to acquire property, often with existing tenants already in place.
This dynamic can create opportunities for investors seeking income-generating assets, particularly when homes are sold with tenants and established rental streams.
Industry reaction to the findings
“Landlord sales do not automatically mean a rental property disappears from the sector,” said Mark Long, founder and director of Pegasus Insight. “In a meaningful minority of cases, the property is simply being transferred from one landlord to another, and sometimes sold with tenants already in place."
“However, the overall direction of travel still points to a shrinking PRS. When a substantial proportion of landlord sales are going to first-time buyers or other owner-occupiers, it inevitably reduces the pool of homes available for rent."
“Policymakers must recognise the cumulative impact of ever-tighter regulation and rising taxation on landlords, particularly smaller operators. Many are deciding that the pressures and uncertainty are no longer worth it. This is significant because the PRS provides homes for around 20% of the UK’s households, so policy decisions affecting landlords ultimately have consequences for tenants too.”
What this means for landlords
The findings underline several practical implications for UK landlords and property investors:
Rental supply may tighten further if disposals continue to outpace new investment
Existing landlords could benefit from stronger rental demand where supply falls
Investors acquiring tenanted properties may see opportunities to secure income from day one
Policy changes remain a key factor shaping landlord decisions to hold or exit property assets
The private rented sector remains a critical part of the UK housing system, providing homes for around 20% of households. However, if the balance of landlord sales continues to favour owner occupation, the sector may see further pressure on rental availability.
For lenders, brokers, and investors, the next phase of the market will likely depend on how regulation, taxation, and mortgage affordability influence landlord confidence and investment activity.
