Where to invest if I sell my rentals?
5 months ago
Landlords risk fines, bans and bankruptcy – The answer?
4:52 PM, 16th December 2025, 4 months ago
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The conversation among private landlords has changed. It is no longer about yields, regulation or market cycles, it’s about survival. The publication of the government’s new civil penalty tables has pushed the sector into unfamiliar territory, where the financial consequences of ordinary operational mistakes are measured in five-figure sums, and the prospect of a banning order is no longer remote.
Across forums, advisory meetings and industry groups, landlords are expressing the same concern. They feel exposed, and they feel targeted. Some now feel unwelcome in the very market they have supported for decades. The shift has been sudden, and it has reshaped expectations about what it means to let property in the UK.
This sense of unwelcome is not just emotional. It is reinforced by policy decisions that introduce penalties large enough to destabilise a portfolio and enforcement powers strong enough to remove a landlord from the sector entirely. Meanwhile, other governments in Europe are signalling the opposite intention. Portugal’s recent move to reduce rental tax to 10% is a striking reminder that not every country is choosing to drive out private investment.
This divergence matters because landlords are increasingly comparing risk, reward and political climate across borders. The UK appears to be moving in one direction while competitor jurisdictions move in another. The consequences for supply, investment and market stability will be felt long before the first banning order of the new regime is issued.
Landlords are right to be concerned. The risks they face are significant, and for some, the financial outcomes can be terminal.
The new civil penalty tables make the scale of the risk impossible to ignore. A selective licensing breach now begins at £12,000. A possession error begins at £30,000. Reletting during a restricted period is set at £25,000. Breaching a banning order carries a starting penalty of £35,000. These are not maximums, they are baselines. They reflect the government’s expectation that councils will enforce actively and consistently.
The escalation is not limited to fines. Councils now have a clearer pathway to apply for banning orders. These orders do more than punish, they prohibit. A banning order removes the landlord from the sector entirely, revokes licences, forces properties into management arrangements and places the individual on the national rogue landlord database. Once imposed, recovery is difficult and in many cases impossible.
The combination of high penalties and lifetime commercial consequences raises a fundamental question about the direction of policy. Private landlords supply most of the rental properties in the UK, yet they are now subject to financial risks that exceed those imposed in many sectors of the regulated economy. A minor administrative failure in property management can now attract penalties that surpass those issued for dangerous conduct in other areas of law.
The effect on behaviour is already visible. Landlords who once focused on refurbishment, portfolio growth or strategic refinancing now spend much of their time calculating whether the returns justify the risks in the long term.
This is not a prediction of market collapse, it is a simple observation. When a government raises the cost of participation, some participants will leave. When another government signals it wants landlords to stay, as Portugal has done by reducing rental tax to 10%, investors pay attention.
The UK can sustain a strong rental market only when private investment is respected, stable and rewarded proportionately. At present, the message being received by landlords is the opposite. Uncertainty is rising, penalties are rising, and administrative risk is rising. That is not a sustainable foundation for a sector that houses millions of people.
The coming year will determine how landlords respond. Some will modernise their processes and remain, others will scale back or exit entirely, but every landlord should recognise that the risk calculus has changed. A fine can now wipe out profit, a ban can wipe out a business, and bankruptcy is not an abstract possibility for those with high leverage and sudden enforcement action.
The warnings are clear; Landlords risk fines, bans and potential bankruptcy. The choices made now will determine who survives the new era of enforcement and who does not.
For landlords who decide not to absorb the new risks, the next question is how to exit safely and sensibly. Selling strategies were discussed in my recent article linked below.
However, selling is only half of the decision. The other half is where to place the capital once the exit is complete. Rising regulatory risk in the UK does not mean investment opportunity has disappeared altogether. It simply means the playing field has changed. Some investors will look overseas to jurisdictions offering stability and lower taxation. Others will redirect capital into asset classes with lower regulatory exposure. The important point is that landlords have options, and with careful planning the proceeds of a property sale can be deployed in a way that preserves income while avoiding the escalating compliance burden. I recently published an article on this subject too – see link below.
https://www.property118.com/where-to-invest-if-i-sell-my-rentals/
These decisions are not easy, but the environment now demands clarity. Holding rental property is no longer a passive activity (was it ever?). It has become a highly regulated business with heightened exposure, serious penalties and irreversible consequences for those who fall foul of the rules, intentionally or not. Whether landlords stay or leave will depend on their appetite for risk, their ability to adapt and the strength of their long-term objectives.
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Member Since June 2018 - Comments: 20
11:31 AM, 16th December 2025, About 4 months ago
I would go further to say that the recent government housing initiatives are not primarily aimed at improving standards or helping tenants but maximising the yield from fines. For example, Wandsworth Council’s online Selective Licensing form sets all answers to the negative by default, rather than actively requiring a yes or no. This looks suspiciously like a trap for those not familiar with computers to say no to gas safe, electrics, fire alarms and EPC unless they actively reverse the pre-propulated ‘no’. Users must add a row for each ‘habitable room’. Rather than providing a drop-down menu for bed 1, bed 2 etc and lounge, users are then confronted with ‘Name room area’, ‘Description’ and ‘Area’. It’s gobbledegook.
Member Since December 2025 - Comments: 31
2:21 PM, 16th December 2025, About 4 months ago
I think something else has changed and I mean specifically Mark Alexander’s own reaction to the new environment. I’ve been reading his articles for a long time. Usually he exudes positivity and looks for the bright side in any situation. Now his mood seems bleaker. On 14 December he wrote: ‘Never again will I be letting another property in the UK.’
My family has been involved in the PRS for 60 years, on and off. My mother invested when the Rent Acts were in force but by letting to corporate landlords she made it work – a sort of rent-to-rent arrangement in the current jargon. By the time I did my degree in Estate Management from 1984-1987 even that wasn’t really working and the consensus among both lecturers and the students on my course was that only a lunatic would buy a vacant residential property and let it. Then the Assured Shorthold Tenancies of the 1988 Act, and the subsequent buy-to-let mortgages, changed everything, the pendulum swung the other way, and the PRS became a viable investment sector.
When Gove introduced the Renters Reform Bill I was able to predict that the pendulum would swing back to the old position because I knew that ASTs were the bedrock of the PRS investment thesis. As the RRA progressed through parliament I became ever more certain of this. But I thought it would take several years for the pendulum to swing. I saw how long it had taken for landlords to realise the effect of the ending of mortgage interest as an allowable expense and so I thought it might take 3 or 4 years before there is a mass exodus.
Now, well, I’m not so sure about that. I think the exodus might accelerate. And I’ve just submitted a “Readers Question” post suggesting that landlords ought to decide now, one way or the other, whether they are leaving or staying. And if they decide to leave then the s21 notices ought to go out in January. No later.
Member Since September 2015 - Comments: 12
11:37 AM, 17th December 2025, About 4 months ago
Good morning. I hope some of you may have advice for me which I’d appreciate tremendously.
I’m 19 months away from 80. I’ve only 2 properties left, out of a portfolio of 9. These have BTL mortgages. Long term tenants, 15 and 11 years.
But I’m petrified, however decent my tenants are, of all the new Laws and Fines etc. I’ve got until September 2027 until I no longer have penalties on those mortgages. But my instinct say ‘get rid’…. Both tenants were issued S21 alongside their tenant documents so I know I have until late Spring next year. Both modern but 1 is a C rating and one a D, so I have that to face too.
I do understand no one wants to give advice they may come to regret, but I’m grateful if you’d tell me what YOU’D do under the circumstances! Just so I’ve made sure I’ve thought it all through really.
To sell or not to sell!
Thank you.
Member Since December 2025 - Comments: 31
11:53 AM, 17th December 2025, About 4 months ago
Reply to the comment left by Gilly Osborne at 17/12/2025 – 11:37
Hi Gilly. You seem to have already made your decision by issuing s21 notices. Are you having second thoughts? If so, why is that?
Member Since September 2015 - Comments: 12
12:29 PM, 17th December 2025, About 4 months ago
Reply to the comment left by Michael Crofts at 17/12/2025 – 11:53
Hello Michael, the S21’s were served automatically alongside the paperwork the Agent provided, at the time the tenants took possession. I had a brilliant agent, for years who was very thorough and not attached to an estate agency, but a sole trader. She never left a box unticked!
15 and 10 years ago she informed me it was a safety measure and I could serve it at any time.
Member Since December 2025 - Comments: 31
1:47 PM, 17th December 2025, About 4 months ago
Reply to the comment left by Gilly Osborne at 17/12/2025 – 12:29
Oh dear.
Housing Act 1988 Section 21(4B) – A notice under subsection (1) or (4) may not be given in relation to an assured shorthold tenancy of a dwelling-house in England—
(a) in the case of a tenancy which is not a replacement tenancy, within the period of four months beginning with the day on which the tenancy began,…..
This is where the standard 6 months period for an AST comes from because a s21 notice can’t be served in the first 4 months and must give 2 months notice.
However you can start again with fresh s21 notices because an invalid notice does not end the tenancy or start any “clock”; it simply cannot be relied on in court, so the landlord is free to issue a fresh notice.
But back to my original question – are you having second thoughts?
Member Since September 2015 - Comments: 12
1:59 PM, 17th December 2025, About 4 months ago
Reply to the comment left by Michael Crofts at 17/12/2025 – 13:47
Thanks Michael. Appreciate your comments. I’m not sure what I’m thinking! Both houses have good tenants. Neither want to buy the property they are renting. I’m just getting on a bit, and tired of all the new rules and laws and feel beleaguered by it. They were bought to provide an income in retirement. It now has morphed into a burden I didn’t expect or want! The 2008 recession was difficult enough but subsequent governments seem to be determined to rid the BLT market of small, independent landlords. I’m anxious reading about these potential fines! There’s no reason I would be subject to them. I’ve always looked after my tenants well but the thought is enough! I expect many small landlords are experiencing the same level of confusion and despair!
I’ve got 19 months before I’m able to put them onto the market for sale then I pay no penalties on my mortgages. I’m just wondering if I should join so many other small landlords and say ‘stuff it, I want out!
Member Since December 2025 - Comments: 31
3:05 PM, 17th December 2025, About 4 months ago
Reply to the comment left by Gilly Osborne at 17/12/2025 – 13:59
Obviously this isn’t advice but it may be some help to you.
Based on what you have said I think you may have two viable options. The first is to serve valid s21 notices taking note of the fast approaching deadlines, and if everything goes OK you could get out now, put the houses on the market, but probably incur the penalties for early redemption of your mortgages.
The second option in your circumstances is probably to rely on the new mandatory ground 1A which is that you intend to sell the properties. In theory this will enable you to regain possession. [read it here: https://www.legislation.gov.uk/ukpga/2025/26/schedule/1%5D
I claim some credit for the existence of mandatory ground 1A because of representations I made to, and correspondence with Michael Gove and later representations to the Committee for the Renters Reform Bill, (my name is cited in a committee report). Quite a lot of the RRA 2025 draws on the groundwork for Gove’s earlier Bill.
But there is a very important caveat. Mandatory ground 1A is not yet in force and will only come into force if the Secretary of State makes a regulation bringing it into force – see s.145(7) RRA 2025 [https://www.legislation.gov.uk/ukpga/2025/26/section/145]. Note the use of the word “may”. The SoS is not compelled to bring 1A into force. So there is no guarantee. And I suspect Generation Rent and Shelter will make representations to Pennycook that 1A should NOT be brought into force. If Pennycook succumbs to such representations then he need do nothing, he could just sit on his hands. If that is a real risk then your ONLY certainty lies in the service of s21 notices while there is still time to do this.
Member Since June 2018 - Comments: 20
3:10 PM, 17th December 2025, About 4 months ago
Reply to the comment left by Michael Crofts at 17/12/2025 – 15:05
Great analysis Michael. I think there would be a powerful push back if the ‘sitting tenant’ scenario was re-introduced, effectively prohibiting landlords from selling vacant-possession property.
Member Since September 2015 - Comments: 12
3:16 PM, 17th December 2025, About 4 months ago
Reply to the comment left by Michael Crofts at 17/12/2025 – 15:05
Thank you Michael. I see I’m receiving advice from an expert. I’m afraid your link is broken but I do understand that S8 can be used if a landlord wishes to sell a property. Unless they’ve changed this too? So if I didn’t serve S21 I could use S8?
If 1A doesn’t come into force and I haven’t Served S21 then I’m going to be stuck unless I can Serve S8.
But Serving S21 say, April or May ‘26 does mean once the tenants vacate and I sell, then I obviously pay the penalty on mortgages.
I’m in a no win situation and I bet I’m not the only small landlord feeling this way.