A recent survey reveals shifting dynamics within the private rental sector as some landlords decide to exit the market while others actively seek growth opportunities. The research, highlighted by MPA Mag, points to several key challenges influencing these decisions, including tax burdens, regulatory changes, and rising operational costs.

Among landlords choosing to sell their rental properties, 14% identified Capital Gains Tax as the principal driver behind their decision. Higher interest rates accounted for 12%, while 8% attributed their exit to the government’s proposed Renters Rights Bill. These factors collectively contribute to an environment prompting some landlords, particularly smaller or amateur ones, to reconsider their involvement in the buy-to-let (BTL) market.

Conversely, a significant portion of landlords remain optimistic about the sector’s prospects. Nearly 29% of those surveyed expressed intentions to expand or diversify their property portfolios. The research suggests that the market increasingly favours larger, well-capitalised landlords, who are reportedly better positioned to manage rising costs and regulatory demands.

Despite this confidence, ongoing challenges persist for landlords who choose to stay active in the market. Rising construction costs concern 17% of respondents, while 16% worry about escalating competition from international investors and the possibility of policy changes under the Labour government. Additional pressures include stamp duty alterations and new safety regulations, each noted by 15% of landlords as significant impediments.

Ryan Etchells, chief commercial officer at Together, commented on the current market conditions, stating, “BTL is a robust market and while the impact of cost pressures and wider regulatory changes is apparent, we are still seeing a healthy proportion of landlords riding out the wave and expanding their portfolios.” Speaking to MPA Mag, Etchells added, “There will likely be some smaller or amateur landlords who decide to sell off investments or exit completely, but in their position we are already seeing larger, professional landlords stepping in to seize diversified opportunities.”

Etchells also highlighted potential future developments, noting that “until the final outcome of the Renters Reform Bill is known, there may be a bit more volatility as landlords assess the cost impact to them and their property plans this year. But on the whole, it’s a changing of the guard rather than a mass exodus.”

He further emphasised the role of flexible regulations and an agile lending sector in supporting landlords: “A combination of more flexible BTL regulations and an agile lending sector can help landlords to manage their portfolios and ensure they are able to leverage all available opportunities – something the specialist sector is in a prime position to do.”

This evolving landscape indicates a reshaping of the buy-to-let market, with a trend towards consolidation by professional landlords and ongoing regulatory and financial challenges influencing the broader sector’s trajectory.

Source: Noah Wire Services