The much-publicised decline of the small-scale private landlord is creating significant opportunities for professional investors to expand their share of the UK rental market — a shift some experts are calling a “net positive” for standards and tenant experience.

Pressure on Amateur Landlords

Private landlords are facing a sustained squeeze from multiple directions: reduced tax relief, higher mortgage costs, and tighter regulations have steadily eroded yields.

Government data shows that one third of small-scale landlords plan to reduce the size of their portfolios in the next two years, up from 22% in 2021 and 16% in 2018. Almost half of all private landlords own just one property, representing a third of tenancies, while another 38% own between two and four homes.

Jamie Williams, a property expert, believes the sector is undergoing a structural shift:

“The golden age of buy-to-let is over for the hobbyist investor… we’re moving away from the one-man-band landlord and toward a more corporate, strategic approach to property investment. These often have a longer-term outlook, better tenant management and a greater understanding of risk compared to your average Joe that wants to just rent out his old flat.”

Why Professional Landlords Are Rising

The tax landscape has become increasingly unfavourable for individuals. Since 2017, private landlords have been restricted to deducting just 20% of mortgage interest from rental income for tax purposes, compared with 40–45% previously. They also pay income tax rather than corporation tax, which is typically lower.

Tighter regulation — particularly under the proposed Renters’ Rights Bill — is another hurdle. While smaller landlords may struggle, larger corporate operators are more accustomed to navigating compliance and adapting their business models.

Jonathan Hopper, CEO of Garrington Property Finders, warns that “thousands” of homes are being sold by disenchanted buy-to-let investors. Meanwhile, build-to-rent giant Grainger says the new regime will “professionalise the rental market and raise standards” but predicts it will also accelerate smaller landlords’ exit, further constraining supply.

Sam Humphreys, head of M&A at Dwelly, agrees:

“Professional landlords are typically well accustomed to changing government regulations and will have the resilience to adapt… they are best placed to continue delivering quality, well-managed homes.”

Supply Shortages Likely to Deepen

While the long-term outcome may be a more professionalised rental sector, the near-term picture points to worsening shortages.

Ryan Etchells, chief commercial officer at Together, says the shift will “reduce the number of properties available and force rent upwards.”

Rental stock has been static at around 5.5 million homes since 2016, and although rental inflation has eased from double-digit highs in 2023, Zoopla reports there are still 12 prospective tenants chasing every home to rent — far above pre-pandemic levels.

Grainger warns that without a significant boost to supply, the rental crisis will “worsen in the next decade” as demand continues to grow.