"Our research confirms that many landlords are deeply concerned about the impact of the Renters’ Rights Bill, energy efficiency requirements and a potential hike in Capital Gains Tax on buy-to-let property"
- Mark Long - Pegasus Insight
New research from mortgage market specialist Pegasus Insight reveals that the UK’s Private Rental Sector may be heading for a supply crisis, as 37% of landlords plan to sell property in the next 12 months, while only 6% intend to buy.
According to the Q1 2025 Landlord Trends report, the number of landlords planning to exit or reduce their portfolio has nearly doubled since Q1 2022. In contrast, landlord appetite for expansion has fallen sharply. 58% now have an exit timeline in mind, with just 22% saying they have no plans to sell.
Recent activity reflects this shift:
22% of landlords sold property in the past year – four times the number who purchased.
Only 28% of sold properties stayed in the PRS.
Most sellers sold to owner-occupiers, particularly first-time buyers (31%), while most buyers acquired properties from fellow landlords.
Despite this trend, fundamentals in the PRS remain strong, with 73% of landlords reporting good or very strong tenant demand. Average yields remain healthy at 6.3%, close to a 10-year high. Profitability has remained consistent over five years, aside from a brief dip in 2023.
Mark Long, founder and director of Pegasus Insight, warned of rising tenant pressure if the trend continues:
“These results suggest a large cohort of disillusioned landlords, worried about the future of the sector and further demands the government might place on them," he said, "Our research confirms that many landlords are deeply concerned about the impact of the Renters’ Rights Bill, energy efficiency requirements and a potential hike in Capital Gains Tax on buy-to-let property. The fact that so many feel compelled to sell up despite the underlying health of this market is particularly galling.
He added, “A proportion of the intended sales will be down to selective pruning by larger landlords, and some of the divested property will be hoovered up by other landlords. But there’s no doubt that the volume of stock in the PRS will reduce in the next 12 months. And as supply falls while demand remains strong, rents will inevitably rise yet further, hurting tenants.
“The government must wake up to the dangers of a shrinking PRS and change its approach to the landlords who provide homes for 19% of the UK’s population. Now is the time for policymakers to consult with the industry on ways to support landlords and encourage further investment in the PRS, before it is too late.”
