Thousands of private landlords are planning to reduce their rental portfolios or exit the buy-to-let sector altogether, amidst challenging market conditions.

The Simply Business Landlord Report, compiled from the analysis of a survey of 1,455 UK landlords, shows tahat despite the surge in demand for rental properties, a quarter of landlords plan on selling an investment property in the next 12 months.

The study found that over the past 12 months, 9% of landlords have released a rental property from their portfolio. The South East, Wales and the South West were revealed as top areas for sales. Conversely, the North West, Scotland and the East of England emerged as the top regions for landlords buying properties across the UK.

Changing legislation was cited as the most common reason for putting property up for sale, rising costs across the board also proved to be a glaring challenge. Almost a third – 31% – of landlords reported an increase in buy-to-let mortgage payments in the past year, with 19% reporting that their mortgage repayments had risen by up to 501%.

Despite the current climate, many landlords still consider rental property to be a worthwhile investment, with 50% saying that they would recommend investing in buy-to-let property.

Alan Thomas, UK CEO at Simply Business, commented: “A combination of economic uncertainty, changing regulations, and rising costs means there’s no shortage of challenges facing the nation’s landlords in 2023. The cost of living crisis has affected all corners of society, and the buy-to-let sector is no different.

“Our inaugural UK Landlord Report shows that landlords see rising costs as the single biggest threat to the rental market. An ongoing theme in recent years has been uncertainty, with two-thirds (66 per cent) telling us that constantly changing and confusing government legislation is one of their greatest challenges.

“Insuring more than 300,000 landlords allows us to gain first-hand insight into the integral role they play in the housing market, plus the challenges they’re facing. It’s important that landlords are given the time and information they need to prepare for significant upheaval in the coming years, so they can continue to provide much-needed housing for almost five million households nationwide.”

A separate survey to gauge the sentiment of landlords in response to the Renters Reform Bill very much supports Simply Business’ findings.

The survey results from research carried out by Leaders Romans Group (LRG) revealed that 68% of landlords intend to maintain their current property portfolios, while 6% are considering expanding their investments.

Of those landlords who expressed intent to sell, 52% attributed their decision to policy-related concerns, whereas 25% cited economic factors, and 23% mentioned “personal circumstances unrelated to income”. This indicates that while policies play a role, other individual factors are also influential in landlords’ decision-making process.

LRG’s survey further highlighted varying perspectives on the Renters Reform Bill. Notably, 60% of landlords believed that the Bill would negatively impact them as property investors, in contrast to only 6% who believed it would have a positive impact. However, when considering the impact on tenants, the outlook shifted significantly. Around 50% of landlords believed the Bill would positively affect tenants, while only 14% anticipated a negative impact.

Allison Thompson, national lettings MD, Leaders Romans Group, said, “It is clear from the survey we have conducted that landlords are still very much invested in the lettings industry, with 74% of them planning to continue with their portfolios, providing much needed homes.”

Interestingly, despite concerns and varied viewpoints on the Bill, a significant portion of landlords indicated that it would not significantly alter their approach to property investment. In response to the question, “Will the Bill change your approach to property investment?”, 40% of respondents answered ‘no’, while 33% said ‘yes’, and 27% remained undecided.

Consistent with research carried out by LRG in Q1, the research findings revealed that the use of Section 21 for tenant eviction remains infrequent. The survey reported that 79% of landlords had never utilised Section 21, and 13% had used it to evict a tenant in the past but not within the last year. Furthermore, when Section 21 was employed for eviction within the past year, it was predominantly due to breaches of lease terms. Notably, only 4% of landlords had issued a ‘no fault’ eviction within the past year.

Allison continues “However, it is imperative that their viewpoints on the Rental Reform Bill are not only considered but that their concerns are recognised and amendments to the Bill made to ensure the future of the private rental sector is protected and homes continue to be available for those who need them.”

Renters Reform Bill set to get second reading in parliament next week