Why fewer landlords are replacing those who exit

A critical imbalance is becoming visible within the private rented sector, and it is not just about how many landlords are leaving, but how few are replacing them. According to the Property118 Landlord Sentiment Survey Q1 2026, the rate at which landlords are reducing or exiting portfolios is not being matched by new or expanding investors. Based on 2,380 completed responses, 57% of landlords plan to reduce their portfolios, while only 6.8% intend to expand. You can review the full findings here.

The headline is clear: exits are not being replaced.

An imbalance in participation

Markets rely on balance. When participants exit, new entrants or expanding participants typically take their place. The survey data suggests that this balance is no longer present within the landlord market. With a significantly higher proportion of landlords planning to reduce exposure than increase it, the gap begins to widen. This is not just a temporary mismatch, it is a directional shift.

Barriers limiting replacement

The absence of replacement is not simply a matter of choice. As highlighted in the Property118 dataset, younger landlords are underrepresented, with fewer than 3% of respondents under the age of 40. This suggests that barriers to entry are playing a role. Higher costs, more complex regulation and changing financing conditions all contribute to a more challenging environment for new investors.

Existing landlords stepping back

At the same time, many established landlords are reassessing their position. With portfolios built over many years and often supported by significant equity, decisions to reduce or exit are being made from positions of strength rather than necessity. This creates a different type of market dynamic. The survey findings show that these decisions are widespread, not isolated.

Implications for supply

If landlords exit without being replaced, the structure of the rental market changes. Properties leaving the sector may not return as rental stock, particularly if they are purchased by owner-occupiers. At the same time, with fewer landlords expanding, there is limited new supply entering the market. This creates a gradual tightening. The effect may not be immediate, but over time it becomes more visible.

A widening gap

The combination of increased exits and limited replacement points towards a widening gap within the sector. As more landlords step back and fewer step forward, the balance shifts further.

For now, one conclusion stands out: the private rented sector is not currently replacing the landlords it is losing, and that imbalance is likely to shape its future direction.

A conversation worth having?

If you are weighing up your own strategy, whether that’s to sell, expand, or restructure to improve profitibility, it is worth having a discussion with a Property118 consultant to take a closer look at how your portfolio is structured as a whole now, and to forecast the outcomes based on multiple scenario’s.

These conversations are typically most useful for landlords with established portfolios and relatively modest borrowing who are beginning to reflect on how their assets could work more effectively in the years ahead.