More than a quarter of landlords plan to leave the rental market, while others are reducing their portfolios. Islay Robinson explores what this shift means for landlords, buyers and the future of buy-to-let.

More than a quarter of landlords in England say they are planning to leave the rental market altogether.

That is the headline finding from new research by SpareRoom, but I think the more important story sits underneath it. The rental market is not simply shrinking. It is starting to change shape.

SpareRoom's September survey of 668 landlords found that 27% were planning to leave the rental market entirely, while a further 36% were reducing their portfolios. Fewer than 4% said they were expanding. Among landlords with five or more properties, 53% were cutting back, while 44% of single-property landlords said they were leaving altogether. Overall, 78% said they had no confidence in the current rental market following the introduction of the Renters' Rights Act. These are stated intentions rather than completed sales, and previous surveys have shown exit intentions running ahead of actual changes in supply.

Those numbers are significant, but one part of the research caught my attention more than the headline figure.

Some landlords are leaving without actually selling yet.

SpareRoom says some landlords have told them that, although they are not currently selling their properties, they do not intend to re-let them once their existing tenants move out. That is a much quieter form of exit, and it will not necessarily appear in transaction data immediately. But economically, the effect is similar: there is one less property available to rent.

That matters because rental supply is already under pressure. SpareRoom's Q2 data showed UK flatshare supply falling 3.2% year on year, ending three consecutive years of growth, while room rents reached record highs in six of the UK's nine regions.

So we have an unusual combination developing. More landlords are questioning whether they want to remain in the sector, while tenants are competing for a smaller pool of available accommodation.

The Landlords Leaving Are Not All The Same

The split by portfolio size is particularly interesting.

Single-property landlords are the most likely to say they are leaving entirely. Among landlords with one rental property, 44% said they were exiting the market. By comparison, 22% of landlords with five or more properties said they were leaving altogether, although 53% of the larger group said they were reducing their portfolios.

That makes sense from what I see with clients.

Owning one or two investment properties can be very different from operating a larger portfolio. A larger landlord can spread costs, manage refinancing across several assets and take a more strategic view of the portfolio as a whole. For a smaller landlord, a change in regulation, taxation, financing costs or administration can have a much greater impact on the economics of an individual property.

The result is that some smaller landlords are deciding that the complexity is no longer worth it.

Larger landlords, in many cases, are taking a different approach. They are not necessarily abandoning the sector. They are becoming more selective.

That distinction is important.

What This Means For Sellers And Buyers

I am increasingly seeing two very different conversations with clients.

For landlords who have already decided to leave, the priority is often speed and certainty rather than achieving the absolute maximum possible price.

Once someone has mentally moved on from an investment, the calculation changes. They may be more interested in a straightforward sale, clearing existing borrowing (early repayment charges may apply) and redeploying their capital than spending months trying to extract another percentage point from the transaction.

For buyers, the situation looks rather different.

A buyer entering the buy-to-let market today may be looking at properties that would have attracted considerably more competition in a stronger market. An existing portfolio landlord may see an opportunity to consolidate, dispose of weaker assets and use the proceeds to acquire others. Any purchase still needs to work on rental income, costs, tax and regulation, and rental income is not guaranteed.

But neither opportunity is particularly useful if the financing is not ready.

That is where I think the current market becomes interesting.

When more owners are prepared to sell and fewer buyers are competing for some properties, certainty of funds becomes part of the negotiation.

A buyer who has already had their financial position assessed and understands what they can realistically borrow is in a very different position from someone who is only starting the financing process after agreeing a purchase.

That does not mean an agreement in principle is a guarantee of funding. It is not a formal mortgage offer, and the final decision remains subject to the lender's valuation, underwriting and individual criteria.

But preparation can still make a meaningful difference when timing matters.

Buy-To-Let Is Becoming More Professional

There is a broader structural change here that I think will become increasingly important.

If the market moves towards fewer smaller landlords and a greater concentration of properties among larger, more established portfolios, the typical buy-to-let borrower starts to look different.

That matters to lenders.

A landlord with several properties may have different financing requirements from someone buying their first investment property. They may be looking at portfolio-level borrowing, refinancing several assets, releasing equity from one property to fund another acquisition, or restructuring debt across a wider group of holdings.

In those situations, looking at each property in isolation does not always give the full picture.

That is why I am increasingly pointing clients who are restructuring or consolidating towards specialist buy-to-let lenders and private banks that can assess the wider portfolio and overall financial position.

The right lender is not necessarily the one advertising the lowest headline rate. It is the one whose criteria fit the borrower, the property and the wider structure of the deal.

The Quiet Exits Could Matter Most

The thing I will be watching over the next year is not simply how many landlords appear in the sales statistics.

It is what happens to the properties that never reach the market.

If a landlord sells, we can see the transaction. If a landlord decides not to re-let after a tenant leaves, that is much harder to measure in real time.

Yet both decisions reduce the stock of privately rented property.

SpareRoom's latest figures already show how quickly supply can change. Its Q2 data recorded a 3.2% annual decline in flatshare supply, while six of nine UK regions recorded record room rents.

That creates a difficult backdrop for tenants, but it also creates an increasingly important question for landlords: what role do you want your property portfolio to play over the next five or ten years?

For some, the answer will be to leave.

For others, it will be to reduce the number of properties and concentrate on the strongest assets.

And for a smaller group, I suspect some will see reasons to buy, although property values and rental income can fall as well as rise.

My View

I do not think this is simply a story about landlords losing confidence.

It is a story about the rental market becoming more selective.

The smaller landlord who is tired of the regulatory burden may decide to sell. The larger landlord may use the same environment to consolidate. A new investor may see less competition and more negotiating power. The financing strategy will be different for each.

That is why I am less interested in the headline number of landlords leaving than in who is leaving, who is staying and what the remaining landlords are doing with their portfolios.

For anyone selling, financing and execution can determine how quickly they can move on.

For anyone buying, having finance properly structured before entering a negotiation can determine whether an opportunity is actually achievable.

The rental market is clearly going through a period of change. The Renters' Rights Act is part of that story, but it is not the whole story. Financing costs, portfolio economics, taxation and the changing profile of landlords all feed into the decision.

Whatever view you take on the direction of the rental market, I think one thing is becoming increasingly clear: the landlords who remain are likely to be more professional, more selective and more deliberate about how they finance and manage their portfolios.

And that is going to change the market around them.

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Risk warning: Your home or property may be repossessed if you do not keep up repayments on your mortgage.

General information: This article is for general information only and does not constitute personal financial or mortgage advice. Lending decisions, rates and terms are subject to individual circumstances and lender criteria. Property prices can fall as well as rise. Enness does not provide property, investment or tax advice.

Buy-to-let: Most buy-to-let mortgages are not regulated by the Financial Conduct Authority. Rental income is not guaranteed, and void periods, arrears, regulatory changes and taxation can all affect returns.