Far more landlords are planning to sell off property than invest in the next year, as 39% said they will probably exit the market within the next five years, research from Pegasus Insight revealed.
Pegasus’ latest Landlord Trends report (Q1 2025) revealed that 37% of landlords intended to reduce the number of properties in their portfolio in the next 12 months, almost double the proportion planning to sell in Q1 2022 (20%).
Over the same timeframe, those planning to expand their lettings portfolio has fallen from 18% to 6%.
Recent sales activity is now running at almost four times the level of recent purchases: 22% sold a property in the last year, just 6% bought.
More highly leveraged landlords with four or more buy-to-let mortgages were the most active, with 11% buying a property in the last 12 months and around three times this number selling (31%).
Just 28% of properties sold by landlords definitely stayed in the private rental sector (PRS).
While most investors buying a new property bought from another landlord (58%), those selling predominantly sold to owner occupiers (67%), especially first-time buyers (31%).
Just 28% said they sold to another landlord, indicating a potentially large reduction in stock available in the PRS.
Despite the negative viewpoint these results suggest, the underlying fundamentals of the PRS remain solid, with good tenant demand in most areas, high average rental yields and a steady profitability outlook.
Just over seven in 10 landlords reported strong tenant demand in the area(s) where they let.
37% said current demand is ‘very strong’, 36% ‘quite strong’, 18% ‘average’ and just 3% ‘weak’.
The average achieved rental yield remained high and largely unchanged at 6.3% – just 0.2% below the 10-year high recorded in Q3 2024.
The long-term profitability trend for landlords remained stable.
Aside from a slight blip in 2023 when mortgage interest rates initially began to increase, landlord profitability remained relatively high and consistent over the past five years.
Mark Long, founder and director of Pegasus Insight, said: “These results suggest a large cohort of disillusioned landlords, worried about the future of the sector and further demands the government might place on them.
“Our research confirms that many landlords are deeply concerned about the impact of the Renters’ Rights Bill, energy efficiency requirements and a potential hike in Capital Gains Tax on buy-to-let property.
“The fact that so many feel impelled to sell up despite the underlying health of this market is particularly galling.”
He added: “A proportion of the intended sales will be down to selective pruning by larger landlords, and some of the divested property will be hoovered up by other landlords.
“But there’s no doubt that the volume of stock in the PRS will reduce in the next 12 months. And as supply falls while demand remains strong, rents will inevitably rise yet further, hurting tenants.”
Long concluded: “The Government must wake up to the dangers of a shrinking PRS and change its approach to the landlords who provide homes for 19% of the UK’s population.
“Now is the time for policymakers to consult with the industry on ways to support landlords and encourage further investment in the PRS, before it is too late.”
