MoneyWeek has published an article asking Landlords Forecast to Exit BTL Market in Droves – Has the Exodus Started?

It can be seen here and says that almost 100,000 landlords are expected to leave the buy-to-let (BTL) sector this year, with evidence mounting that smaller landlords are already selling up. Brokers warn this could mark the beginning of a wider exodus that reshapes the rental market.

Landlords Selling Up

A survey of brokers by Black & White Bridging suggests that 93,000 landlords with BTL mortgages – around 6% of the total – are likely to sell before year-end. This follows a fall of 65,000 landlords between 2023 and 2024.

The lender’s COO, Damien Druce, said the trend reflects landlords with one or two properties who “don’t want to face ongoing changes to regulation and rising costs”.

Fresh HMRC data supports this picture: capital gains tax receipts from residential property sales have more than doubled in seven years, a sign that smaller landlords are cashing out.

The Policy Backdrop

Over the last decade, landlords have faced a series of tax and regulatory changes that have eroded returns:

• Removal of full mortgage interest tax relief, replaced by a 20% tax credit.
• Stamp duty surcharges on second homes (5% in England, 8% in Scotland).
• The proposed abolition of Section 21 ‘no-fault’ evictions under the Renters Reform Bill.
• Higher borrowing costs following recent interest rate rises.

Speculation is also growing that the Chancellor may use the next Budget to extend National Insurance contributions to rental profits, potentially raising £2bn for the Treasury.

Shaun Moore of Quilter warned: “This imbalance will inevitably push rents even higher, worsening affordability for tenants and deepening the housing crisis.”

Shifting to Limited Companies

Industry experts predict that more landlords will turn to incorporation to shield themselves from tax changes, but warn this could reduce the Treasury’s expected revenue from new measures.

Some argue the government should instead revisit mortgage interest relief. “A fairer system would allow landlords to deduct interest before tax – even if income tax or NI is then applied,” Moore suggested.

Rates and Repossessions

There is some brighter news: buy-to-let mortgage rates have fallen to their lowest levels since September 2022. The average two-year fixed now sits at 4.88%, down from 6.64% a year ago. Product choice has also reached record highs, with more deals available at 75% and 80% LTVs.

However, pressures remain acute. BTL repossessions are up 11% year-on-year, according to UK Finance. NRLA data shows that 26% of landlords sold at least one property in 2024, while just 8% bought.

Outlook

The direction of travel is clear: smaller and “accidental” landlords are leaving the market, squeezed by regulation, taxation and costs. Larger, incorporated landlords may weather the storm, but the result could be a shrinking pool of rental homes – pushing rents higher and worsening affordability.