Smaller landlords look to sell up and exit the PRS

Major structural changes are taking place in the UK’s private rented sector (PRS) with smaller landlords more likely to exit the market than those with larger portfolios.

According to The Deposit Protection Service (The DPS), 24.5% of landlords with one or two properties plan to sell up and leave the PRS, compared with 12.2% of those who have more than 10 properties.

Conversely, 13.5% of landlords with portfolios of more than 10 properties aim to buy more properties, compared with 5.6% of those who own one or two properties.

The survey shows that landlord business choices are having a significant impact on their plans for the PRS.

‘Showing a stronger commitment to the PRS’

The managing director at The DPS, Matt Trevett, said: “Whilst the volumes of tenancies we protect remains unchanged, the data suggest that landlords operating on a larger scale are showing a stronger commitment to the PRS compared with those with fewer properties.

“Landlords with a higher number of properties typically choose to place their businesses inside limited companies in order to better manage their costs, which are impacted by high interest rates and tax changes.”

He added: “We are also seeing different intentions emerge among landlords who use companies compared with those who don’t, suggesting that how a landlord chooses to organise their business has a significant impact on their attitude towards the market.”

Sell all their properties and exit the PRS

Of the landlords who intend to leave the PRS, 21.7% who are not set up as a business to rent out property, plan to sell all their properties and exit the PRS completely.

That compares with 10.3% of those who operate a limited company.

The survey also reveals that 24.1% of landlords who operate a limited company plan to buy more property, compared with 4.6% of those who are not set up as a limited firm.

Only 8% of landlords operating as sole traders plan to buy more rental properties – and 21.7% plan to sell all their properties and leave the PRS altogether, The DPS added.

The survey also showed that 35.8% of landlords renting out property that used to be their own home plan to sell all their properties and exit the PRS completely – compared with 18% of landlords that bought their property to rent out.