We’re four months into the Renters’ Rights Act, and yet hordes of landlords continue to call it quits on the Private Rental Sector (PRS). The first phase of the Renters’ Rights Act came into force on 1 May, but it hasn’t stopped landlords from continuing to call time on their rental investments. The figures are staggering. We’re losing 505 rental properties every day in 2026 to-date, equating to over 200% more than in 2020.
A landlord exodus was clearly evident as the Act approached, with the number of landlords exiting the PRS accelerating in the months leading up to 1 May. We reported that 111,696 homes left the private rental market in 2024 after being sold by landlords. In 2025, this figure was around 181,000 properties, making it the busiest year for landlords exiting the market. (It’s important to note that the Renters’ Rights Act only impacts England, but the figures cover the whole of the UK.)
For many, the May 1st, 2026, deadline was firmly in mind, and many landlords chose to act before the new rules came into force. The biggest motivator was the abolition of Section 21 ‘no fault’ evictions, which had allowed landlords to regain possession without having to provide a reason. There were also concerns around other measures, including the ban on rental bidding wars and new protections against discrimination based on benefits or having children. As the deadline approached, countless landlords jumped ship, rushing to serve Section 21 notices while they still could.
We had reported in Q1 that the exodus seemed to have run its course and was easing. In January 2026, just 10.4% of all homes listed for sale were formal rentals, which was much closer to the long-term expected average. Perhaps shaky economic conditions have rattled the remaining landlords, as here we are, post the deadline, and we’re still losing rental properties at worrying rates. In fact, 834,800 properties have left the PRS so far this decade, and the rate of exit is continuing to increase. This means nearly one in every six rental properties have left - an immense shift for the sector.
The impact is being felt across the country. Nationwide, we’ve lost 18.6% of all private rental stock, and 14.2% in London. There’s evidence that more landlords could be considering exiting. Research from Allsop found that 42% of landlords said they were unlikely or very unlikely to continue letting, rising to 52% among single-property landlords. Almost one third (30%) said they planned to sell all the homes they let out, with a further 18% planning to reduce the size of their portfolios.
Why are landlords still leaving?
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Squeeze on profitability
The introduction of Section 24 back in 2020 had already squeezed landlord profitability, limiting the tax relief available on mortgage interest and other finance costs and meaning higher-rate taxpayers could no longer claim relief at their full marginal rate. In the current climate, profitability is being hit even harder. Mortgage rates are currently hovering around 5% and reducing margins for those needing to refinance. Operating costs have also risen, with landlords facing higher bills for repairs, insurance and other running expenses.
The new regulations are confusing for many landlords causing some to seek out the help of letting agents, which comes with a price tag. Those who remain are now banned from rental bidding and cannot accept offers above the advertised rent, meaning they have less chance to maximise income through rental increases.
What’s more, from April 2027, the government is due to introduce separate income tax rates for property income. Rates are expected to be 22%, 42% and 47%, subject to relevant legislation. This could put further pressure on landlords’ after-tax returns.
For landlords with higher-value properties, another cost is on the horizon. From April 2028, owners of properties worth £2 million or more will face the High Value Council Tax Surcharge, ranging from £2,500 to £7,500 a year. As the payment is charged to the owner, not the occupier, the cost will fall on the landlord.
For many, it just feels like the juice isn’t worth the squeeze.
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Tighter regulation
Landlords are also facing more regulation than ever before, with EPC requirements adding further pressure. The Government expects all rented homes to meet EPC C by 2030, up from the current minimum of EPC E. This means many landlords will have to invest more in insulation, heating and electrical systems. The government estimates that the average spend per property to reach EPC C will be £5,400, but research from Pegasus Insight found that landlords estimate it will cost them, on average, £11,713 per property. The government has capped the cost at £10k over a 10-year period, but for those landlords with more than one property or really old stock, the bills could be substantial. This is particularly pertinent when you consider that there are currently 2.5 million homes below standard.
Could the implementation of the second phase of the Renters’ Rights Act, due to begin late 2026, be causing the continued exodus? The second phase includes the introduction of the Database of PRS properties that will bring together information for landlords, tenants and councils. Tenants will be more informed when entering new tenancies, and it will help landlords understand their obligations and compliances. The industry appears to be concerned about the extra costs and administrative burden this will place on them. Landlords will face hefty fines of up to £7,000 for non-compliance. On a similar vein, the introduction of a Landlord Ombudsman for the PRS (due 2028) will also incur additional costs and add another layer of regulation.
Phase three will come later, and this focuses on raising physical housing standards and property conditions. The Renters’ Rights Act will be subject to the Decent Homes Standard 2026, but no date for this has yet been confirmed. This will be the minimum quality standard all rentals will have to adhere to and could mean meeting the standard requires additional expenditure. All these added regulations are adding fuel to the fire of an already fed-up PRS.
Conclusion
More compliance, more legislation and more confusion are changing the economics of being a landlord. For many, the combination of rising costs, tighter regulation and the growing complexity of managing a rental property simply means the returns are no longer worth the hassle. Others are struggling to keep up with an ever-changing regulatory landscape and are unsure what they need to do, when they need to do it by and how much it will cost. For landlords already teetering on the edge, it may not take much more to push them over it, with the next cost or regulation becoming the final straw that sees them leave the PRS for good.
