New research highlights a rental sector in transition, with landlords adapting to economic pressures, regulatory change, and evolving tenant expectations. Rather than chasing short-term expansion, many are prioritising long-term sustainability and portfolio resilience.

Retention Over Exit

LRG’s latest lettings report shows that 60% of landlords intend to retain their existing portfolios, signalling stability amid a changing market. While 22% are considering exiting, rising operational costs — rather than falling tenant demand — are the primary driver.

Among those planning to sell, 12% intend to reinvest in different properties, often choosing modern, energy-efficient, or lower-maintenance homes. Only 7% plan to expand, reflecting a shift toward consolidation and sustainable investment.

Strategic Reshaping, Not Mass Exodus

The trend aligns with national insights: The DPS Private Rented Sector Review found that 52% of landlords are considering selling some or all properties, but only 25% of these are contemplating a full exit. The remainder plan to reinvest or rebalance, highlighting adaptation rather than abandonment.

HMRC’s 2024 landlord study, conducted with Ipsos, revealed 60% of landlords entered the market as investors, while 40% inherited or purchased properties as primary residences — underscoring diverse motivations and the importance of supporting long-term sustainability.

Property Types Driving Portfolio Decisions

Landlords highlighted certain property types as increasingly difficult to manage:

• Older homes: 54%
• Leasehold flats: 29%
• Larger family homes: 11%

These challenges reflect rising regulatory complexity, energy efficiency requirements, and leasehold management costs. CBRE’s May 2025 PRS Insight also notes a growing trend toward divestment from energy-inefficient and leasehold stock, aimed at de-risking portfolios and improving long-term viability.

Regulatory and Financial Pressures

The main influences on portfolio decisions include:

• Regulatory changes: 27%
• Tax policy: 26%
• Mortgage rates: 11%

Despite these pressures, landlords remain active. Confidence in the future is supported by factors that would encourage growth over the next two years:

• Tax reform: 59%
• Regulatory clarity: 17%
• Faster court processes: 14%
• Support with energy efficiency upgrades: 10%

Tenant demand remains strong. According to the NRLA, 71% of landlords report high tenant demand, even though only 2% feel confident in the current policy direction — highlighting the need for stability to unlock future supply.

Measured Transition

Allison Thompson, National Lettings Managing Director at LRG, commented: “Landlords are not walking away from the sector. They are responding to a more complex environment with caution, clarity and long-term thinking.

This is still a market with committed landlords who want to provide good homes and make sound investments, but they need the right framework in place to do that with confidence. 

In a sector shaped by regulation, reform and demand-side pressure, landlords are not standing still — they are stepping forward with strategy.”

Editor’s Note:

I have been doing several talks and panel sessions recently, especially on the Renters Rights Bill, and have conducted a straw poll asking who is selling; who is buying and who is staying still.

The results were very similar to the above, 60% doing nothing, 20% selling 20% buying.  But is is a straw poll