The private landlord has not lost faith in bricks and mortar, but the appetite to buy more of it has all but gone. Just 3.9 per cent of landlords plan to expand their portfolios over the next year.
This is according to a survey of 437 landlords in England carried out for London agent Benham and Reeves in 17 August.
For investors, the telling finding is that tax, not the Renters’ Rights Act, is now the biggest reason landlords are holding back, and by a wide margin the change that would tempt them back.
Holding pattern, with a steady leak
This is a sector in a defensive crouch rather than open retreat. Almost two-thirds of landlords (62.7 per cent) intend to keep their portfolio as it is over the coming 12 months, while 50.6 per cent still regard residential property as a good long-term investment despite the tightening regulatory regime.
The exits are real, though. Some 13 per cent plan to reduce their holdings and a further 14.2 per cent intend to leave the rental market altogether, a combined 27.2 per cent shrinking or selling up against fewer than four in 100 buying, echoing other polling pointing to a wave of disposals.
Among the few who do want to grow, retirement and long-term investment planning was the motive for 43.7 per cent, well ahead of strong tenant demand (17.2 per cent), good value (16.1 per cent) and expected house price growth (11.5 per cent).
Confidence thin, profits expected to fall
A third of landlords (33.9 per cent) describe themselves as confident about the sector’s long-term future, but 39.1 per cent are somewhat or very unconfident.
More than a third (38.9 per cent) expect their buy-to-let portfolio to become less profitable over the next 12 months, more than five times the 7.6 per cent who expect an improvement. The remaining 45.8 per cent see profitability staying flat.
More than three-quarters of landlords (78.5 per cent) say being a landlord is a less attractive proposition than five years ago, and 51.9 per cent say it is much less attractive.
Tax outranks the Renters’ Rights Act
Asked what is holding back further investment, 28.3 per cent of landlords named landlord taxation, nearly double the 15.1 per cent who pointed to the Renters’ Rights Act and wider regulation. Property prices came third at 12.6 per cent, with economic uncertainty (9.8 per cent), problem tenants and rent arrears (8.6 per cent), stamp duty (6.8 per cent) and mortgage and finance costs (6.2 per cent) behind.
The burden is about to get heavier. From April 2027, income tax rates on property income rise by two percentage points to 22 per cent, 42 per cent and 47 per cent, according to the National Residential Landlords Association, which helps explain why landlords have been incorporating in record numbers.
When asked what would prompt them to expand, 36.9 per cent chose more favourable landlord taxation, far ahead of lower stamp duty (13.7 per cent), a faster or easier possession process (12 per cent), greater confidence in the economy (11.6 per cent) and lower property prices (9 per cent).
Marc von Grundherr, director of Benham and Reeves, said: “Despite years of headlines predicting the demise of the private landlord, the reality is that buy-to-let remains an incredibly strong long-term investment and, importantly, half of landlords themselves still believe this to be the case.
“The issue isn’t that landlords have lost faith in property. The problem is that the environment in which landlords are being asked to operate has become substantially less attractive.”
He said it was also interesting to see that taxation was the biggest block. “Regulation has understandably dominated the conversation recently, but landlords have also faced a sustained increase in the financial burden placed upon them and our survey suggests this is having the greatest impact on investment appetite,” he said.
Where the remaining money is going
For those still buying, the traditional single-let remains the default by a distance, favoured by 48.2 per cent, followed by properties needing refurbishment (18.3 per cent) and holiday or short-term lets (11 per cent). Specialist strategies trail: HMOs (5.5 per cent), student accommodation (4.3 per cent), corporate lets (3.7 per cent) and new-build homes (3.7 per cent).
What this means for investors
The marginal buyer has all but vanished, and the obstacle is arithmetic rather than sentiment. With higher rates on rental income legislated for 2027, the trade-offs between personal and company ownership deserve a proper look before then.
There is a quieter opportunity here too. If one landlord in 25 is buying while one in seven is selling, supply will keep tightening in a market the agent says has extremely strong rental demand. Investors with the balance sheet to hold, and the discipline to price in higher tax, may find thinning competition works in their favour.
