Landlords have been leaving the private rented sector for years, and the reasons have changed. What started as a tax story now has cost and compliance attached: higher tax on rental income is legislated for April 2027, the cost of holding has already moved, and the possession rules make a sale that falls through more expensive.
In short
- Income tax on rental profit rises to 22%, 42% and 47% from April 2027, already legislated under the Finance Act 2026.
- In the government’s own 2024 survey, 66% of landlords cutting back named recent tax and legislative changes as the reason.
- The share planning to decrease has risen from 16% in 2018 to 22% in 2021 and 31% in 2024.
- Selling with vacant possession now needs Ground 1A, a four-month minimum notice under the Renters’ Rights Act 2025.
- Hamptons found landlord purchases exceeded landlord sales in June 2026, the first month since 2019 that happened.
In the government’s own survey, carried out in April and May 2024, landlords planning to cut back named tax and legislative changes as their most common reason. The more recent counter-signal matters as much: Hamptons found that in June 2026 landlord purchases exceeded landlord sales for the first time since 2019. This is what both mean whether you are holding, selling or buying.
The 2027 tax rise landlords face
The largest single reason to reconsider holding is already law and has not started yet.
Section 7 of the Finance Act 2026 sets the rates of income tax on property income for the 2027 to 2028 tax year: 22% at the basic rate, 42% at the higher rate and 47% at the additional rate. Section 6 is the machinery that creates those rates as a distinct category and applies them to property income, with effect for 2027 to 2028 and later years.
They apply to taxpayers in England and Northern Ireland, and to non-UK residents with UK rental income. Scottish taxpayers pay Scottish rates on this income.
That is two percentage points above the rates on other income for 2026 to 2027 at every band. It is legislated rather than proposed, so it is not a consultation a landlord can hope goes away, and it applies to property income specifically. Our note on what the 2027 rates do to a portfolio works the arithmetic through.
On £10,000 of taxable rental profit, a higher-rate landlord pays £4,000 today and £4,200 from April 2027. On £50,000 of profit that is £1,000 a year. It does not sink a good asset. It does change the answer on a marginal one, and marginal is where most exit decisions sit.
The costs and rules landlords weigh before selling up
The 2027 rates land on a cost base that has already moved. Finance costs for individual landlords have not been fully deductible since the restriction applied in full from 6 April 2020, which is one reason many landlords now hold through companies. We covered the mechanics in our piece on Section 24 and company structures.
Energy efficiency is the cost most often misdated. The enforceable minimum for letting in England is still EPC E, and has been since April 2020. The move to EPC C by 2030 is confirmed government intention with a published design, awaiting an Act and a statutory instrument. Landlords budgeting for it are budgeting sensibly.
Myth: EPC C is already required for letting. It is not, as our EPC C explainer sets out.
Then there is possession. Since 1 May 2026, under the Renters’ Rights Act 2025, a landlord selling with vacant possession uses Ground 1A of the Housing Act 1988, which carries a four-month minimum notice.
Section 16E of the same Act then bars re-letting or marketing to let during a restricted period. Section 16M ends that period twelve months after the date the notice names for proceedings, which on a four-month notice is roughly sixteen months from service.
A sale that collapses inside it leaves an empty property that cannot lawfully be re-let.
Why landlords say they are selling
The best evidence is not commentary. It is the government asking landlords directly. In the English Private Landlord Survey 2024, 31% of landlords said they planned to decrease the number of properties they rent over the next two years, including 16% who planned to sell everything. Only 7% planned to increase.
The trend is the part that matters. That 31% was 22% in 2021 and 16% in 2018, while the share planning to grow fell from 12% in 2018 to 11% in 2021 and 7% in 2024. The direction has held for six years.
Asked why, landlords named tax and law, not tenants or yields:
| Reason cited | Landlords citing it |
|---|---|
| Recent tax and legislative changes | 66% |
| Forthcoming legislative changes | 44% |
| Investment viability, including rising interest rates | 40% |
| Poor experience with tenants | 21% |
The administrative load belongs in that column too. Making Tax Digital has applied since April 2026 to landlords with qualifying income over £50,000, and reaches those over £30,000 from April 2027.
Gearing is where it concentrates. Landlords with buy to let mortgages were the most likely to be planning to decrease, at 20%, against 11% for those with other loans and 11% for those with no borrowing.
Two caveats: the survey reports intentions, and MHCLG says plainly that these are not necessarily predictive of the size of the sector, because not every intention becomes a sale and a property that sells may stay rented under a new owner. The fieldwork was April and May 2024, so it predates the current tax and possession rules.
Intentions are also not the same as the flow. Hamptons, an estate agency owned by Connells Group whose lettings index uses the group’s own figures, reported that 9.2% of homes listed for sale in June 2026 had previously been rented, down from 11.3% a year earlier. It also said June was the first month since 2019 in which landlord purchases exceeded landlord sales.
These figures are why we have said before that the exit is real but the acceleration is contested, and why rising intent alongside a falling share of ex-rental listings looks like a long, steady withdrawal rather than a stampede. TwentyEA, part of the TwentyCi property data group and a supplier of data to estate agents, reported in September 2026 that around 562 rental properties a day were leaving the sector so far in the third quarter of 2026, up from 495 a day at the same point a year earlier and the highest rate since its records began in 2016. The 562 and 495 a day figures are on TwentyEA’s own news site, in a post dated 25 September 2026; the 1.3% stock figure and the description as the highest rate since 2016 come from trade press reports of the release, which also report a 13.6% year-to-date rise in new supply coming to market that TwentyEA’s own post calls a rise in rental stock. TwentyEA counts properties leaving the rental sector, not the net balance of landlord purchases against sales that Hamptons tracks above, so the two are not directly comparable. TwentyEA also said the overall stock of homes available to rent has still grown by about 1.3% over the past year, as the number of properties newly coming to market has run ahead of lets agreed, helped by growth in build to rent stock. Available stock counts homes on the market, not the size of the private rented sector, so we read this as faster churn, with build to rent supplying a growing share of what is on the market, rather than as proof that the sector is growing or shrinking.
What this means for property investors
If you are holding, the question is not whether the sector is under pressure but whether your particular asset is. Run the 2027 rates against your own taxable profit rather than the headline. Check whether your yield still works after finance costs, and whether the property needs capital spending you were planning to defer. A good asset survives all of this. A marginal one may not.
Weigh the exit cost too. For most individual landlords capital gains tax on the sale is a far bigger number than the income tax change above, and the one most likely to decide whether selling pays. This is general information, not advice on your situation, so take independent advice before acting.
If you are selling, price both routes before committing to either. Tenanted stock is priced on rent and yield, vacant stock on comparables, and the gap decides the strategy. Our note on what your rental is worth to an investor sets out both sums, and a desktop valuation does the income side for you.
If you own the property, a valuation is the quickest way to see which side of that line it sits on. Send us the address, the rent and the tenancy and you will get a free desktop valuation with the comparables and the yield working shown.
If you are buying, this is why stock is available, and why a seller’s reasons are worth understanding before you set your offer. See what is on our books.