An estimated 220,000 households are projected to leave the private rental sector (PRS) in England by the end of 2026.
This is according to the latest research from Pepper Money, a specialist lender.
This equates to around 5% of the country’s private rental stock.
Pepper’s survey suggests the trend is most pronounced among smaller landlords, with those owning a single property twice as likely to exit the market compared with landlords holding two or more properties.
The upcoming Renters Rights Act, coming into effect next month, emerged as a major trigger, influencing landlords to withdraw over 65,000 households from the PRS in England by the end of the year.
The legislation’s changes to tenancy agreements, notice procedures and property management obligations is prompting landlords to reconsider their portfolios across the country.
Paul Adams, sales director at Pepper Money, says: “Whilst we welcome the additional protections for tenants introduced through the Renters Rights Act, and the continued focus on improving standards across the private rental sector, it’s important to recognise the potential unintended consequences for supply and pricing at a time when the sector is already under pressure.
“These legislative changes follow a series of fiscal and regulatory shifts that have cumulatively squeezed landlord returns and altered the economics of buy to let investing.
“With just 5% of landlords buying a new rental property in the last year, and new starts in build to rent remaining subdued, it’s unlikely this exiting stock will be replenished at the same rate, meaning we could see a dip in rental dwellings this year.
“The data also points to a shift in the make-up of the sector.
“Smaller landlords, particularly those with just one property, are significantly more likely to leave the market as they reassess their portfolios.
“Larger landlords who are better equipped to absorb additional costs and regulatory requirements are choosing to remain, contributing to a gradual professionalisation of the private rented sector.”
This article is taken from Landlord Today