The UK rental market is currently facing an unprecedented shortage of available properties, largely driven by a significant number of landlords exiting the sector. Recent data reveals that the total number of rental properties across the UK has fallen sharply, with an 18% decrease compared to the previous year and a 23% drop below pre-pandemic levels. This decline is the result of many landlords choosing to leave the market, reduce their property portfolios, or shift to short-term lets. A survey by SpareRoom found that 67% of landlords plan such changes in 2025, reflecting growing uncertainty in the rental sector.
Several factors contribute to this landlord exodus. Financial pressures are chief among them, as rising mortgage rates and the gradual removal of mortgage interest tax relief have increased operational costs, reducing landlords’ profitability. Regulatory changes, including the introduction of the Renters’ Rights Bill which aims to abolish Section 21 “no-fault” evictions, have also made landlords wary about their ability to regain possession of their properties when needed. Additionally, higher taxes such as increased stamp duty on buy-to-let properties and capital gains tax hikes have further discouraged investment in the rental market.
The impact on tenants has been profound. With fewer rental properties available, rents have risen sharply, and competition for homes has intensified. Almost half of all rental properties are now listed at over £1,500 per month, with more than 15% exceeding £3,000. The average agreed rent stands at around £1,767 monthly, making housing less affordable for many renters. The situation is especially acute in major urban centres such as London, where 42% of landlords reportedly plan to exit the rental market in 2025. This has pushed many tenants into a highly competitive market with fewer options.
Some landlords are choosing to convert their properties into short-term or holiday lets, which often provide higher returns. However, this trend further reduces the availability of long-term rental homes, adding to the shortage and instability faced by tenants seeking permanent accommodation. This shift complicates efforts to stabilise the rental market and maintain a consistent supply of affordable homes.
In response, the UK government has begun introducing reforms aimed at balancing tenant protections with landlord interests. The English Devolution and Community Empowerment Bill, for example, bans “upward-only” rent reviews in new commercial leases to create a fairer rental environment. While such reforms intend to support tenants, they may also influence landlords’ decisions around property management and investment, potentially affecting market supply further.
Overall, the UK rental market is at a critical juncture. The substantial reduction in rental properties due to landlord departures has pushed rents higher and intensified competition among tenants. To ensure a sustainable and equitable rental sector, policies must carefully consider the needs of both tenants and landlords, fostering financial viability for landlords while protecting tenants’ rights and affordability. Without a balanced approach, the shortage of rental homes is likely to worsen, impacting thousands of renters across the country.