Landlords are choosing to sell ahead of the Renters’ Rights Bill

A wave of landlords exiting the market is reshaping the UK housing landscape, according to Knight Frank’s latest forecast.

It points to regulatory pressures and rising costs for driving landlords to sell, with both house prices and rents set to climb over the next five years, fuelled by tighter supply and improving mortgage rates.

The real estate firm is predicting that rents will surge by 18.8% by 2029, with London rents climbing 17.1%.

The forthcoming Renters Rights Bill, expected later this year, is tightening the screws on landlords by complicating property repossession and rent collection.

EPC demands forcing landlords out

This, coupled with stricter green regulations requiring PRS homes to achieve a minimum Energy Performance Certificate rating of C by 2030, is prompting some landlords to exit the market.

Tom Bill, the head of UK residential research at Knight Frank, said: “Landlords are facing a perfect storm of regulatory pressures and rising costs.

“Many are choosing to sell rather than navigate the new landscape, which is squeezing rental supply and driving rents upward.”

Data from Rightmove underscores the supply crunch, revealing an 18% drop in new rental listings in England in Q1 2025 compared to the same period in 2019.

Despite this, demand for rented homes remains robust, fuelled by affordability challenges in the sales market as mortgage rates gradually fall.

House prices to rise

Knight Frank has also upgraded its outlook for house prices, now anticipating a 3.5% rise in 2025, up from a previous estimate of 2.5%.

Over the next five years, cumulative price growth is projected to reach 22.8%, a significant jump from the 19.3% forecast in November 2024.

Greater London is also set to benefit, with a five-year growth forecast of 18.2%, revised upward from 15.3%.

Mr Bill said: “Falling mortgage rates are breathing new life into the market.

“The prospect of cheaper borrowing is igniting demand, particularly in areas where affordability has been a persistent hurdle.”

More rate cuts predicted

The Bank of England’s recent interest rate cut by 0.25% to 4.25% has further bolstered confidence in the housing sector.

Markets are now anticipating two to three more rate cuts this year, making fixed-rate mortgages more affordable.

And in prime central London, political uncertainty has dampened near-term prospects.

Knight Frank has slashed its 2025 forecast for this high-end market, now expecting flat prices rather than the 2% growth previously projected.

The government’s decision to replace the non-dom regime with a less competitive scheme has driven some wealthy investors away, softening demand.