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The UK’s rental property market is entering a period of transformation, with thousands of landlords expected to leave the market in 2026 after battling high inflation, new regulations and higher taxes.

In 2025, approximately 93,000 buy-to-let landlords exited the market, and property purchasing firm LandlordBuyer thinks this was only the beginning.

With new taxes to contend with and much stricter rental laws, LandlordBuyer believes that this stream of exits is set to speed up in 2026, rather than slow down.

Landlords Plan To Downsize Or Exit Completely

The聽landlord聽exodus聽shows no signs of slowing. Data from a recent English Private聽Landlord聽Survey, revealed that:

• 31% of landlords plan to reduce the size of their portfolio, and
• 16% of landlords said they are considering selling all their rental properties within the next two years.

And for many, this news isn’t much of a surprise. In fact, landlords seem to have been hit with the perfect storm as of late, starting with The Renters’ Rights Act and ending with an increase in landlord taxes announced in the autumn budget.

The result? Owning rental properties is becoming far less desirable in the UK.

Jason Harris-Cohen, Managing Director at聽LandlordBuyer, comments:

鈥淭he sector is reaching a critical tipping point. The 93,000 landlords who left in 2025 were just the start. What we鈥檙e seeing now is a wave of private landlords, particularly those with one or two properties, choosing to exit before legal, financial or regulatory risks increase further.”

Renters鈥� Rights Act Puts Power Back In The Hands Of Renters

The Renters鈥� Rights Act, which came into effect just a few months ago, abolished Section 21 鈥榥o-fault鈥� evictions, making it harder for landlords to remove tenants from their properties – even if they aren’t paying rent.

Whilst the move was celebrated by some, many landlords have said it makes renting out their properties riskier, especially as it gives them little rights when it comes to evicting tenants if they don’t pay rent.

This has been made even more difficult by tighter local authority guidelines like EPC rules and licencing, adding more cost and complexity to an already difficult situation.

And when it comes to the impact, Landlordbuyer says it means more landlords are now selling with tenants in situ to avoid the long eviction process.

They commented “At LandlordBuyer, we鈥檙e seeing more landlords than ever looking to sell tenanted properties quickly, without going down the eviction route. Selling with tenants in place is becoming the norm, not the exception.鈥�

Rising Taxes Add Even More Pressure

As of the autumn budget, alongside better renters rights, landlords also have to pay more taxes on rental income.

From April 2027, rental income will be taxed under new, separate property income tax brackets, with rates 2% higher across all bands:

• 22% basic rate (up from 20%)
• 42% higher rate (up from 40%)
• 47% additional rate (up from 45%)

While landlords do get 拢1,000 of their profits tax free, this change, alongside the freezing of income tax brackets, mean more landlords are forced into paying higher taxes.

Alongside this, other costs to landlords include the new mansion tax, payable on properties valued over 拢2 million. With the average rental yield in the UK sitting at 5.8% (Zoopla), it’s no wonder that so many are pulling their money out to invest in much more stable avenues.

Robin Edwards, a property buying agent at commented “As a property buying agent working closely with landlords across the UK, it鈥檚 clear that the private rental sector has become far less attractive than ever in the last few years. The issue certainly isn鈥檛 a lack of demand, rental prices remain聽high and demand from tenants is exceptionally strong. The main issue is the massive increase in costs, as well as new draconian rules聽and regulations for private landlords.

“Successive tax changes have massively eroded profitability, most notably the removal of full mortgage interest relief, which has turned many once-viable rental properties into poor investments, particularly for higher-rate taxpayers. At the same time, stamp duty increases and higher interest rates have sharply increased borrowing costs, while rents, despite rising, often haven鈥檛 kept pace with the jump in monthly expenses that landlords now have to pay.

“On top of this are the ever-expanding rules and regulations. Well-intentioned reforms around energy efficiency, tenant rights and safety have created a lot of uncertainty and significantly more costs. Many landlords are also very uneasy about the new Renter’s Right Bill that weakens their ability to regain possession, especially when dealing with non-paying or problematic tenants.

“For small, private landlords in particular, property now feels less like a long-term investment and more like a heavily regulated business with rapidly diminishing returns. Faced with rising compliance costs, higher taxes and more attractive alternative investments, it鈥檚 not surprising that many are choosing to exit the sector in 2026 and cash in while property prices still remain relatively strong.”

The Impact On The Rental Market

With private landlords looking to exit, the supply of private rentals is expected to shrink, putting further pressure on tenants in areas like London, Bristol, and Manchester.

Rent inflation, already running above wage growth, may also get worse if more landlords leave the sector without being replaced.

A Rental Sector In Movement

Whilst many will agree that supporting renters rights is something to be celebrated, others will say that these reforms have gone a step too far, leaving landlords with little space to maneuverer.

As landlords have to keep up with tighter regulations and higher taxes, it looks like 2026 is going to be a transformative year for the rental sector.

Did the autumn budget push them a step too far? We will wait and see.