220,000 homes set to leave the PRS this year

An estimated 220,000 households are set to leave the private rented sector (PRS) in England by the end of 2026, equal to around 5% of available stock, according to Pepper Money.

More than 65,000 of those exits are tied to the Renters’ Rights Act, due to take effect on 1 May.

The reasons for doing so include changes to tenancy agreements, notice rules and management requirements as they review portfolios.

However, smaller landlords account for much of the movement and those with a single property are twice as likely to exit as landlords holding multiple homes.

Rented home numbers to fall

The lender’s sales director, Paul Adams, said: “Our research highlights how the combination of changing legislation and rising operating costs is prompting many landlords to review their portfolios.

“Whilst we welcome the additional protections for tenants introduced through the Renters’ Rights Act, and the continued focus on improving standards across the private rental sector, it’s important to recognise the potential unintended consequences for supply and pricing at a time when the sector is already under pressure.

“These legislative changes follow a series of fiscal and regulatory shifts that have cumulatively squeezed landlord returns and altered the economics of buy to let investing.”

He added: “With just 5% of landlords buying a new rental property in the last year, and new starts in build to rent remaining subdued, it’s unlikely this exiting stock will be replenished at the same rate, meaning we could see a dip in rental dwellings this year.”

PRS expands massively

The research also shows how the sector has expanded from 3.1 million households in 2008-09 to 4.7 million in 2024-25 and now representing 19% of households in England.

Supply remains below earlier levels and Rightmove reports that available homes to rent are 9% higher than last year, but still 33% lower than a decade ago.

In the South East, more than 46,000 dwellings are projected to leave the sector before the end of 2026.

That accounts for over a fifth of all exits, with 15% of landlords in the region planning to sell.

By contrast, the North East records the highest share of landlords intending to exit, at 21%, although this represents 8% of total departures due to lower overall stock.