Around 5% of England’s private rental stock could be lost from the sector by the end of this year, according to projections from specialist lender Pepper Money.
The lender estimates that 220,000 households will leave the sector as landlords reassess their options, although this could provide opportunities for property investors who do want to expand.
Smaller landlords are more likely to leave the market, according to Pepper Money’s research, with those who own a single property twice as likely to exit as those who own two or more properties.
The newly launched Renters’ Rights Act is one of the biggest drivers of change, prompting landlords to withdraw more than 65,000 households from the PRS in England by the end of the year.
It comes as the abolition of section 21, the move to periodic tenancies and major changes to rents, notice procedures and property management obligations reshape landlords’ ambitions and portfolios.
Paul Adams, sales director at Pepper Money, said: “Our research highlights how the combination of changing legislation and rising operating costs is prompting many landlords to review their portfolios.”
A squeeze on rental stock
But he warned of the challenges ahead as rental stock is squeezed, “whilst we welcome the additional protections for tenants introduced through the Renters’ Rights Act, and the continued focus on improving standards across the private rental sector, it’s important to recognise the potential unintended consequences for supply and pricing at a time when the sector is already under pressure.
These legislative changes follow a series of fiscal and regulatory shifts that have cumulatively squeezed landlord returns and altered the economics of buy-to-let investing. With just 5% of landlords buying a new rental property in the last year, and new starts in build-to-rent remaining subdued, it’s unlikely this exiting stock will be replenished at the same rate, meaning we could see a dip in rental dwellings this year.
The changes will also lead to a significant shift in the sector’s make-up.
Smaller landlords, particularly those with just one property, are significantly more likely to leave the market as they reassess their portfolios. Larger landlords who are better equipped to absorb additional costs and regulatory requirements are choosing to remain, contributing to a gradual professionalisation of the private rented sector.”
Regional impact
The South-East is projected to see the highest volume of dwellings exiting the PRS, with more than 46,000 dwellings leaving the market, representing more than a fifth of exits across the UK as a whole, with 15% of all private landlords planning to sell.
One in five (21%) of landlords planning to sell in 2026 in the North-East, marks the region with the highest proportion of landlords exiting, although this accounts for only 8% of the total PRS exits nationally.
Tenant affordability crucial as rent rises slow
Landlords will need to carefully navigate the challenges of tenant affordability after the latest ONS figures for rental growth and inflation were released yesterday.
This will make the correct pricing of rents crucial going forward, particularly after the Renters’ Rights Act coming into force on May 1st.
UK monthly rental prices increased by 3.4% to £1,377 in the 12 months to March 2026, according to the ONS. However, the number is down from 3.6% for the 12 months to February 2026. Inflation, meanwhile, rose to 3.3% for the 12 months to March, up from 3% in the twelve months to February.
However, neither set of figures yet reflects the full economic impact of the war in Iran, which is yet to filter through fully to inflation and other market measures.
Nicky Stevenson, managing director at Fine & Country, said “these figures relate to a period before some of the more recent cost pressures and volatility in everyday bills fed into household budgets, so it will be important to see how the next few months play out for confidence and affordability.”
Energy prices piling on pressure
Adam Hoyes, senior asset allocation analyst at Rathbones, said “headline UK CPI inflation reaccelerated in line with our expectations on the back of the Iran war, from 3.0% in February to 3.3% in March. The increase was, unsurprisingly, an energy price story. Energy inflation jumped from -1.0% in February to +4.9% in March, almost entirely due to higher prices at the pump.
Fuel prices have risen further since the March data were collected. Weekly government data show the average price of petrol up around 12% in April relative to March, while diesel prices are almost 20% higher.
That could add another 0.7 percentage points to headline inflation at the next data release, more than offsetting the downward pressure on inflation from the energy bill price cap, which was lowered by just under 7% in April. And the lower price cap is increasingly looking like it is only delaying the pain for households, given that it is likely to rise again in July.
Expectations were that headline inflation will ease to around 3% again in April but pointed out that before the conflict it was expected to be closer to the 2% target.
The outlook for inflation and interest rates beyond April remains heavily dependent on developments in the Middle East and global energy markets,” he said.
Pressure on prices
Tom Bill, head of UK residential research at Knight Frank, says "landlords could be forced to raise prices further to absorb the the changes of the Renters’ Rights Act, as well as take into account additional inflationary pressures.
Although rental value growth has been declining, the Renters’ Rights Act could increase upward pressure on rents as landlords mitigate higher risks around repossessing their property or guaranteeing rental income."
Alex Upton, managing director, specialist mortgages and bridging finance at Hampshire Trust Bank, said “rental growth has slowed from the peaks seen over the past two years, but the underlying pressure has not gone away. Demand continues to outstrip supply in many parts of the market, particularly for well-located and better-quality stock, and that imbalance is likely to persist while delivery of new housing remains below what is needed.”
Strongest buyers market for sometime
Home sellers are being forced to slash asking prices by 22% on average to get deals over the line, new data has revealed.
The figures, from conveyancing group Access Legal using Land Registry data across 161 local authorities, highlight the growing gap between what sellers hope to achieve and what buyers will actually pay.
In central London, some boroughs are seeing average reductions of more than 50%, with over £600,000 knocked off agreed prices.
Large discounts are also being recorded in many other areas of the country, with some of the biggest reductions in Knowsley at 47%, and Bournemouth and Broxbourne at 43% and 42% respectively.
In Wakefield, Gateshead, Chorley and Caerphilly, sellers are having to accept offers around 40% below asking on average, but in Trafford, in contrast, properties are achieving around 39% above asking price
The data also shows average completion times can stretch to around 605 days in Bournemouth, Christchurch and Poole, as sellers hold out on price and deals take longer to agree.
Mike Connelly, Head of Commercial, Conveyancing at Access Legal, suggests "the cuts are being driven by affordability pressures, with buyers using lender valuations and surveys to push prices down during negotiations. When properties sit on the market for longer, buyers gain leverage and negotiations become more aggressive.
That often leads to late-stage price changes, which can put pressure on already fragile chains.”