A significant shortage of rental homes is on the horizon, with new research from Pegasus Insight revealing 37% of landlords plan to sell in the next 12 months — a sharp rise from just 20% three years ago.

Only 22% of landlords intend to remain in the private rented sector (PRS) long-term, as concerns mount over the Renters’ Rights Bill, energy efficiency mandates, and potential Capital Gains Tax increases.

“Many landlords are deeply disillusioned,” said Pegasus founder Mark Long. “Despite strong tenant demand and solid rental yields, too many feel forced out.”

Key findings:

• Landlord purchases dropped to just 6%, while 22% sold properties in the last year.

• Of sold homes, only 28% stayed in the PRS — the rest were snapped up by owner-occupiers, including many first-time buyers.

• Portfolio expansion appetite has plummeted, especially among highly leveraged landlords.

Tenant demand remains high, with 73% of landlords reporting strong interest and average yields at 6.3%.

Still, 58% have an exit plan, and 39% aim to leave within five years, raising fears of rising rents and diminished supply.