It’s official: Britain is dismantling its private rented sector

Well, who could have predicted that small landlords are leaving the private rented sector?

Thirty thousand small landlords in the UK apparently walked away from buy to let in the year to April 2025.

And that’s BEFORE the Renters’ Rights Act had even taken effect in England, while landlords in Wales and Scotland have also decided enough is enough.

If ministers are looking for a warning light on the dashboard, this one is flashing bright red.

The Telegraph reports that the number of small landlords fell for the first time in five years, while the income they declared also dropped.

Since then, landlords have been hit by the Act, higher stamp duty on additional properties and the continuing effects of a tax regime that has steadily made personally owned buy to let less attractive.

And we are still supposed to believe the landlord exodus is either not happening or is some sort of fallacy.

It really isn’t.

Blame Labour and the Tories

This is what happens when governments spend years making an ordinary business progressively less attractive, then express surprise when the people running those businesses decide to stop.

Labour deserves plenty of criticism, but let’s not forget that the Tories lit many of these fires.

Section 24, higher stamp duty and the original drive to abolish Section 21 did not appear after the 2024 election.

Labour has simply arrived on the landlord-bashing scene carrying a larger can of petrol.

The RRA has piled considerably more risk onto landlords. Possession is more complicated, regulation is heavier and the penalties are potentially enormous.

Add higher finance costs, maintenance bills and taxation and eventually the calculation becomes brutally simple.

Why do we even bother?

Landlords don’t have to be landlords

One Telegraph reader summed it up rather neatly: National Savings can provide a return without a tenant, a leaking roof or having to deal with a clueless council enforcement officer.

That is the comparison policymakers repeatedly fail to understand.

Property competes for capital and the bottom line is that a landlord does not have to remain a landlord.

If £250,000 can sit elsewhere producing an acceptable return without regulation, licensing, possession proceedings and the possibility of a £40,000 civil penalty, sentimentality about providing homes disappears remarkably quickly.

Some people in the Telegraph comments celebrated the sell-off because former buy to let homes might be bought by first-time buyers.

Some certainly will be, so good luck to them.

But this magical theory that every departing landlord creates one happy homeowner and removes one tenant from the market is economics of the playground.

The young professional moving cities, the divorced father needing somewhere quickly, the family unable to secure a mortgage, the student, the worker on a temporary contract and the household saving for a deposit still need somewhere to live.

Selling the house does not make those people vanish.

Landlords are selling up

And what happens when fewer landlords are competing for their business?

Goodlord says a third of tenants have experienced rent increases since the Renters’ Rights Act came into force.

Landlord Action’s Paul Shamplina told the Telegraph that he has never known so many landlords serving notices because they intend to sell.

This is where Labour’s supposedly pro-tenant revolution becomes deeply uncomfortable.

You cannot improve affordability by driving suppliers from a supply-constrained market.

You cannot increase choice by reducing the number of homes available.

And you cannot keep transferring risk and cost onto landlords while pretending none of it will eventually reach tenants.

The bigger question is what the PRS looks like when enough small landlords have gone.

Big is not always better

I keep reading that institutional investors and large corporate landlords will take a greater share of the market.

That is speculation, not evidence of some grand government plan, but the direction of travel deserves scrutiny.

Politicians appear instinctively suspicious of someone owning three terraced houses, yet strangely relaxed about institutions owning thousands.

A small landlord may know the property, know the street and answer the tenant’s call.

Increasingly, that landlord could be replaced by a corporate structure, a call centre and an algorithm deciding the rent.

For years, tenants and the wider public have been told that landlords were the problem.

Now landlords are solving that problem themselves.

They’re selling up, taking their money and leaving the risk, regulation and stress behind.

The government may soon discover that driving landlords out was considerably easier than replacing the homes they provided.

Until next time,

The Landlord Crusader