Thousands of small landlords quit the market as Renters’ Rights Act bites, with experts warning the worst is still to come.
New government data shows that roughly 30,000 small-scale buy-to-let landlords left the property market in the year to April 2025, the first annual fall in landlord numbers in five years. The figures represent a sharp reversal after a long run of growth in the private rented sector, and industry voices say the trend is set to worsen as Labour’s flagship housing legislation, the Renters’ Rights Act, beds in.
Small landlords, typically individuals rather than limited companies who earn under £30,000 a year from letting, appear to be walking away from the sector in response to what trade bodies describe as an increasingly hostile regulatory and tax environment. Rental income earned by this group also fell in cash terms, down some £10 million overall, ending years of steady growth. On average, small landlords declared just £20,500 in rental income, barely up on the previous year once inflation is taken into account.
The pain has not been evenly spread. London landlords saw declared income drop by around £350 million, a two percent fall, while the South East lost roughly 7,000 landlords outright. Scotland recorded a drop of about 2.4 percent, equivalent to around 4,000 landlords, and the Channel Islands saw the steepest fall in landlord income of any region, down close to 24 percent.
A policy-driven decline, industry figures say
Landlord groups have been blunt about where they lay the blame. The National Residential Landlords Association pointed to the run-up to the Renters’ Rights Act, which became law in May, as the backdrop to the first fall in landlord numbers in half a decade. According to the organisation, landlords are grappling with a legislative and tax burden that is squeezing profits and pushing many to reconsider whether staying in the market is worthwhile. The same source cautioned that ordinary tenants would ultimately bear the cost, through a shrinking supply of rental homes driving rents higher still.
That warning is already playing out, if early data is any guide. Letting platform Goodlord has found that roughly a third of tenants have faced rent rises since the Act came into force, and the average price of a new tenancy in England jumped from £1,211 in May to £1,309 in June, a rise of some eight percent in a single month.
Landlord Action founder Paul Shamplina went further, telling The Telegraph that he had never seen so many landlords serving notice to sell up since the Act took effect on 1 May, and predicted that 2025 and 2026 figures would show the exodus accelerating “without a doubt.” He described landlords as having simply run out of patience with rising taxation, higher interest rates, tighter regulation and mounting maintenance costs, concluding that many now see letting property as no longer worth the hassle.
The Government’s own goal
Ministers have presented the Renters’ Rights Act as a landmark reform that will hand tenants greater security and stamp out unfair practices in the sector. Yet the early evidence suggests it may be delivering the opposite of its stated aims. Rather than protecting renters, the flight of small landlords from the market appears to be tightening supply and pushing rents upward, exactly the outcome the legislation was supposed to prevent.
Labour’s decision to layer new regulation on top of tax changes inherited and extended from the last Budget, including the increase in stamp duty on additional properties from three percent to five percent announced by former chancellor Rachel Reeves, has compounded the pressure on landlords already facing higher borrowing costs. Critics argue that this combination of higher taxes and heavier red tape reflects a government more interested in ideological point-scoring against private landlords than in the practical business of keeping homes affordable and available to rent.
Shamplina put it plainly: driving landlords out of the market defeats the entire purpose of the legislation Labour introduced. For tenants now facing steeper rents and a shrinking pool of available properties, that is likely to feel like cold comfort.
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