Are UK Buy-to-Let Landlords Dying Out – and Should We Care?

For more than two decades, the UK’s private rental sector has been underpinned by small, individual buy-to-let landlords. Teachers with a second flat, retirees investing savings, or families building modest portfolios were once seen as essential providers of homes in a country chronically short of housing. Today, that model looks increasingly fragile.

Rising taxes, tighter regulation, higher interest rates and growing political hostility have all converged. The result is a steady exit of landlords from the market, with tens of thousands of rental properties sold each year. This raises a fundamental question: are buy-to-let landlords dying out – and if so, should policymakers, tenants and the wider economy care?

A sector under sustained pressure

The financial case for buy-to-let has deteriorated sharply. Successive governments have narrowed margins by design, responding to concerns about poor-quality housing, insecure tenancies and the impact of landlords on house prices.

Recent changes include:

Higher taxation of rental income, with rates set to rise further from April 2027.

The effective removal of mortgage interest tax relief, meaning landlords are taxed on turnover rather than true profit.

An additional 5% stamp duty surcharge on the purchase of rental properties.

A sharply reduced capital gains tax allowance, making exits more expensive.

Rising compliance costs, including safety rules, licensing schemes and impending energy efficiency requirements.

At the same time, higher interest rates have squeezed cash flow. Around 80% of buy-to-let mortgages are interest-only, leaving landlords particularly exposed to rate rises. HMRC data shows that roughly half of landlords now earn less than £10,000 a year in profit.

For many smaller landlords, the numbers no longer add up.

The retreat of the small landlord

Market data confirms what many landlords already feel. The share of homes bought by landlords has fallen to its lowest level since before the financial crisis. Research suggests that around 200,000 properties were removed from the private rental sector in a single year.

These are not primarily large corporate landlords exiting en masse. Instead, it is often individuals with one to four properties deciding that the risk, regulation and scrutiny outweigh the reward.

From a policy perspective, this outcome was not accidental. One objective of landlord tax reform was to reduce investor competition for smaller homes and improve access for first-time buyers. On that narrow metric, the strategy appears to have worked.

First-time buyers: a genuine success story?

In 2025, a record proportion of homes were bought by first-time buyers. Reduced competition from landlords has helped some households onto the property ladder, particularly in lower-value segments of the market.

For aspiring homeowners, this shift feels overdue. Buy-to-let investors were often portrayed as crowding out younger buyers and inflating prices. Fewer landlords bidding on one- and two-bedroom homes has, in some areas, eased pressure.

However, this success must be viewed in context. The UK still faces a severe housing shortage, and ownership is only one part of the picture. Millions of households will continue to rent for the foreseeable future – by choice or necessity.

The impact on renters

There are approximately 4.7 million households in England alone renting from private landlords. As supply tightens, competition for available homes intensifies.

Economic theory – and recent experience – suggests that fewer rental properties combined with steady or rising demand leads to higher rents. This effect is already visible across much of the country, particularly in cities and commuter areas.

While new legislation such as the Renters’ Rights Act strengthens tenant protections and limits certain eviction practices, it does not eliminate rent increases altogether. In a constrained market, landlords who remain can often raise rents in line with market levels.

This creates a paradox: policies designed to protect renters may, over time, contribute to higher rents if they significantly reduce supply.

The Office for Budget Responsibility has acknowledged this risk, warning that sustained erosion of landlord returns could lead to long-term rent inflation if demand continues to outstrip supply.

Regulation: necessary reform or unintended consequences?

Few would argue that reform was unnecessary. The private rental sector has included some genuinely poor practice, from unsafe properties to unfair evictions. Stronger standards, clearer rights and professionalisation were long overdue.

However, regulation carries costs. Meeting minimum energy efficiency standards, complying with licensing schemes, and navigating complex rules all require time and capital. Large institutional landlords can spread these costs across hundreds or thousands of units. Small landlords cannot.

As a result, regulation may be accelerating a structural shift rather than simply improving standards.

The rise of build-to-rent and institutional landlords

One clear beneficiary of the current environment is the build-to-rent sector. Backed by pension funds and institutional investors, these developments are purpose-built for renting and professionally managed.

Investment in build-to-rent has risen steadily, and the sector offers clear advantages: longer tenancies, consistent standards and predictable management.

But scale matters. Despite growth, build-to-rent still accounts for only around 2% of privately rented homes in Great Britain. It is not yet large enough to replace the homes leaving the market through small landlord sales.

Moreover, build-to-rent developments are typically concentrated in urban centres and may not meet demand in suburban, rural or family-oriented markets where traditional buy-to-let has been dominant.

Social housing: the missing pillar

Any discussion of landlord decline must also confront the UK’s shrinking stock of social housing. Over the past decade, there has been a net loss of social rented homes, despite modest recent increases in new construction.

With limited social housing and insufficient private rental supply, pressure inevitably falls on the remaining parts of the system. Expecting the private sector alone – whether individual landlords or institutions – to absorb this demand may be unrealistic.

Are landlords really “dying out”?

It would be premature to declare the end of buy-to-let entirely. Landlords are adapting:

Some are restructuring portfolios or incorporating to manage tax exposure.

Others are targeting higher-yield strategies, such as HMOs or short-term lets (where permitted).

New entrants still appear, particularly younger investors with longer time horizons.

However, the era of buy-to-let as a low-risk, passive investment for ordinary savers is effectively over. What remains is a more professionalised, capital-intensive sector with higher barriers to entry.

Should we care?

Whether we should “care” depends on perspective.

First-time buyers may welcome fewer investor competitors.

Tenants may benefit from stronger rights, but face higher rents and less choice.

Policymakers must balance fairness, housing supply and long-term affordability.

The economy relies on labour mobility, which in turn depends on accessible rental housing.

At Parachute Law, we see daily how housing policy choices ripple through real lives – landlords reassessing retirement plans, tenants facing uncertainty, and families weighing whether they can afford to move.

The decline of small landlords is not inherently good or bad. What matters is whether their exit is matched by sufficient new housing supply, whether through social housing, build-to-rent, or responsible private investment.

Without that replacement, the risk is clear: fewer homes, higher rents, and reduced flexibility in a housing market already under strain.

The road ahead

The UK housing system is at a crossroads. Driving out poorly performing landlords was a legitimate goal. Driving out supply is not.

If buy-to-let continues to shrink without a credible alternative, the costs will ultimately be borne by renters – particularly those on lower incomes with the fewest options.

The question is no longer whether the buy-to-let model of the past is fading. It is whether policymakers can manage the transition without deepening the housing crisis.

At Parachute Law, we continue to advise landlords, tenants and property owners navigating this changing landscape – because in a system as complex as housing, unintended consequences matter just as much as intentions.

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