Landlords are increasingly abandoning plans to sell their properties as falling apartment values and stronger tenant demand make retaining rental investments more attractive, according to Virelle Group.

The estate agency, which operates across London, Manchester and Birmingham, says some landlords are reconsidering their exit plans despite mounting tax and regulatory pressures.

The trend follows a period in which landlords have faced higher operating costs, the Renters’ Rights Act and further changes to the taxation of rental income due in April 2027.

However, a sluggish sales market is making it harder for some investors to sell without taking a financial hit.

Virelle believes those who remain in the private rented sector could benefit from reduced competition and continued demand from tenants.

Landlords reconsider selling as property values fall

Emily Robison, director at Virelle Group, said the agency had seen a change in landlord behaviour during its first year of trading.

“Despite a number of new legislations and tax implications, we are now seeing an increasing number of landlords holding on to their portfolio rather than selling.

“There are two key reasons for this. Firstly, the sales market has remained sluggish and apartment values have fallen significantly which would see the majority of landlords make a loss if they sold up.”

The agency also believes the departure of other landlords has created opportunities for those retaining their properties.

Robison added: “Secondly, the Renters’ Rights Act and looming tax changes on rental incomes from April 2027 convinced a considerable number of private landlords to sell their properties this year.

“This has resulted in a supply shortage of homes for rent, creating an opportunity for remaining landlords who now benefit from strong tenant demand and the potential of higher rental yields.”

One in four London landlords reportedly return to lettings

The findings follow research from Chestertons last month suggesting that around one in four London landlords who had marketed their properties for sale since the Renters’ Rights Act came into force subsequently returned them to the rental market.

The figures suggest some landlords are reassessing whether selling remains the best option, particularly where achievable prices fall short of expectations.

Meanwhile, rental supply remains under pressure.

Figures from Rightmove’s Rental Trends Tracker, cited by Virelle, show annual asking rent growth of 2.4% outside London and 3.2% in the capital.

Available rental listings in London have fallen by 9% year-on-year, while newly advertised rental properties are down 7%.

Tenant demand has increased by 6% over the same period.

Virelle suggests that properties previously generating gross rental yields of 4% to 5% could potentially achieve 7% to 9%.

However, the agency has not provided transaction data to substantiate those higher yields, which will depend on purchase prices, rental income and individual property costs.

Higher mortgage rates could keep tenants renting longer

The Bank of England’s decision to raise Bank Rate to 4% has added another complication for prospective buyers.

Higher borrowing costs could delay purchases, potentially keeping more households in rented accommodation.

Robison said: “In light of the Bank of England’s recent decision to increase interest rates to 4%, we expect more aspiring homebuyers to put their property search on hold and continue to rent, resulting in further growth for the UK rental sector and opportunities for landlords.”

However, landlords also face higher financing costs, alongside regulatory requirements and tax changes.

For letting agents, the emerging picture is mixed. Some landlords are continuing to sell, while others are choosing to retain properties rather than accept lower sale prices.

Whether this develops into a sustained reversal of landlord exits will depend on rental returns, borrowing costs and the wider housing market.