UK rental market faces supply crisis as two-thirds of landlords plan to exit rental sector or reduce portfolios in 2025
A survey of 942 UK landlords carried out in February 2025 by flatshare site SpareRoom has revealed that:
- Two-thirds (67%) of landlords plan to either leave the rental sector altogether, reduce their property portfolios, or move into short-term/holiday lets.
- Only 4.5% of landlords plan to expand their property portfolios in 2025.
- 88% of landlords have no confidence in today’s private rental sector, compared to 81% in July 2024.
- The top three concerns are the Renters’ Rights Bill (88%), the end of Section 21 (75%) and reduced profitability (70%).
A record number of landlords (88%) have no confidence in the current private rental sector, a figure that increases to 90% in London. More than a third (34%) of landlords plan to leave the sector altogether this year, spelling a stark reduction in long-term rental supply – meaning higher costs for tenants.
Almost one in three (29%) landlords plan on reducing the size of their portfolios this year, while 4% prepare to switch their property to a ‘short-term holiday rental’. In London, this is more acute, with 42% of landlords claiming they plan to exit the market in 2025.
| Landlords: What are your plans for 2025? | % of UK respondents | % of London respondents |
|---|---|---|
| I plan to leave the rental market | 34.1 | 41.5 |
| I'm planning to reduce my portfolio | 29.3 | 28.6 |
| I'm not planning any changes | 28.3 | 35.4 |
| I'm planning to expand my portfolio | 4.5 | 2.4 |
| I plan to invest in holiday/short-term lets | 3.8 | 2 |
The primary reason for the lack of landlord confidence is due to the upcoming Renters’ Rights Bill which has a second reading in the House of Lords this week. Many are concerned about the end of Section 21 – the right for a landlord to issue a no-reason eviction. The reduction in profitability in the current market as well as the newly increased capital gains tax is also proving to be a sticking point.
The table below shows responses from the 88% of landlords who were asked why they were not confident in the rental market right now:
| Reasons | % of UK respondents |
|---|---|
| Renters’ Rights Bill | 88.3 |
| End of Section 21 | 74.8 |
| Reduced profitability | 70.4 |
| Tax increases | 65 |
| Too risky | 56 |
| Capital gains tax | 54.6 |
| Mortgage rate rises | 48.4 |
| Unstable market | 29.8 |
| Decline in property value | 23.6 |
Landlords surveyed also expressed feeling stressed and anxious due to money concerns and the precarious position of their retirement plans, as well as apprehension about future government intervention. More than half (51%) believe being a landlord has negatively affected their health and wellbeing in the past 12 months.
Matt Hutchinson, director of SpareRoom, comments:“Not all landlords are big businesses. Almost half (45%) only have one rental property, some of whom have their life savings tied up in their rental property. If landlords feel like they have no choice but to leave the market, renters will suffer. Lack of supply is already inflating rents, but if landlords follow through on their intentions, the problem will become even more severe.
It's evident the current rental market isn't working for anyone - tenants or landlords. The sector needs change that protects and incentivises supply. If the Government wants stability and affordability then change has to work for everyone.
While common-sense rent reforms will offer tenants greater protection, there is neither support nor incentives for landlords, and nothing in place to protect the market from volatility, which is what we’ll see more of if landlords don’t see the sector as an opportunity worth investing in.”
Comments from landlords surveyed:
“I’m a decent landlord and provide a nice flat that is decorated to a good standard. From 2025 landlords will have no protection. This is my pension and I need the same protection as tenants.”
“I'm a small landlord who is worried that I'll have to sell and end what is essentially my pension plan, due to government changes in the private rental sector. I am a good landlord who tries to look after my tenants, but I'm unable and unwilling to deal with the complete handover of control of my own properties to tenants.”
“There is now no incentive to let properties. The reward was marginal for a long time but is less than that now, so it is not worth the risk, effort and expense. It is better to withdraw from the market and simply put the money in an index fund. Less risk, far less work, less of a tax penalty and overall, far less stress.”