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17/12/25 3:30 pm
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What has 2025 really meant for UK landlords – and where are we heading?
Tom Entwistle looks at the changes in 2025 and speculates as to where it’s going.
The UK rental property market has rarely stood still year-to-year. Successive governments have been constantly “tweaking” the system for years, but 2025 will be remembered as a year when long-threatened radical change finally arrived, and multiple pressures converged.
Residential and commercial landlords alike have been confronted with a new government, new policies and a difficult 12 months. They’ve had to navigate a mix of political reform, tax tightening, regulatory expansion and a stubbornly unfavourable economic backdrop.
For the small and medium-scale landlord in particular, this does not feel like a series of small, isolated changes, but rather a whole collection, a clear direction of travel: higher compliance obligations, reduced control over their own assets, rising costs and shrinking profit margins — most of this justified politically in the name of tenant protection and “fairness”.
This article intends to review the key developments across the UK’s residential and commercial rental markets over the past year. The focus is on market conditions, tenancy and legal reform, taxation, and the political drivers. Crucially, it highlights what these mean for landlords who are neither institutional investors nor speculative traders, but simply long-term responsible landlords labouring to provide good quality, rented accommodation.
According to the latest English Housing Market Survey (2024-2025), the size of the private rented sector has remained stable across all regions at almost 20 per cent. There’s been no significant change in the number of private rented sector dwellings, though the mix of ownership structures is shifting and the proportion of households renting in London has dropped slightly.
Across all tenures, households (owner occupiers and tenants respectively) reported substantially higher mortgage and rent costs compared to five years ago, while satisfaction levels have fallen across all tenures since 2019-20. In 2024-25, owner occupiers were more likely to report being satisfied with their accommodation (94 per cent) than private renters (81 per cent) but the lowest levels of satisfaction reported was in social rented households (75 per cent).
In 2024-25, the private rented sector accounted for 4.7 million or 19 per cent of households. In comparison, throughout the 1980s and 1990s, the proportion of private rented households was relatively steady at between 9 per cent to 11 per cent. While the sector has doubled in size since the early 2000s, the rate has remained around 19 per cent or 20 per cent since 2013-14.
England has 2.3 to 2.8 million private landlords (depending which source you believe)
The English Private Landlord Survey (EPLS) shows there are approximately 4.2 million live deposits registered with one of the three government-backed Tenancy Deposit Protection (TDP) schemes that operate in England, with around 1.3 million of these deposits (30%) registered directly by landlords, representing approximately 513,000 landlords. The remaining deposits were registered by agents acting on behalf of landlords.
Nearly half of landlords own just one property
Just under half of all landlords owned one rental property, though nearly half of tenancies were owned by landlords with five or more properties. 45% of landlords owned just one rental property, representing 21% of tenancies. A further 38% owned between two and four rental properties, representing 30% of tenancies. 17% of landlords owned five or more properties each, representing 49% of tenancies. The proportion of female landlords (50%) has increased since 2021 (44%). However, landlords with five or more properties were more likely to be male (63%).
Two-fifths of rentals owned outright
Around three in five landlords had some form of borrowing on at least one of their properties. While 41% of landlords had no borrowing on any of their properties. 30% of landlords had borrowing on only one property and a further 30% had borrowing on more than one property. Landlords with borrowing commonly paid interest at a fixed rate (69%) with 16% paying interest at a flexible rate and 15% a mixture of the two.
Most tenancies (81%) were represented by individual landlords, with companies representing 15% of tenancies and those who let as both representing 3%. The split between individual landlords and companies was similar in 2018 and 2021. In 2018, 94% of landlords - representing 83% of tenancies – were individual landlords
While tenancy tenures increase in length, landlord tenures decline
While the average tenure for tenants in the private rented sector (PRS) was around 4.0–4.3 years in 2023-24, analyses put typical tenancy lengths at around 4.3–4.6 years in recent years, up from around 3.7–3.8 years a decade ago.
These figures describe tenant behaviour, not landlord (tenure) holding or exit patterns. They do indicate, however, that tenancy churn has reduced over time, which can indirectly affect landlords’ decisions about holding or selling a property — because longer tenancies reduce turnover, and fewer available properties may influence market liquidity.
Landlord exit trends indicate shorter anticipated or actual market participation Although average tenure as a landlord is not reported directly, and the statistic is not readily available, industry research points to small landlords exiting the sector in significant numbers, which suggests shorter average participation for some cohorts:
Broker data and bespoke industry reports suggest tens of thousands of buy-to-let landlords have exited the market over a short period (e.g., 65,000 exited 2023–24 and up to 93,000 more expected to exit in 2025). A disproportionate share of these are small landlords with one or two properties.
Surveys by lenders show some landlords intend to hold over the short term (e.g., 58 per cent plan to keep properties for the next 12 months), but this leaves a significant minority planning to sell or scale back, especially among small portfolios.
Interpreting this: many small landlords are signalling much shorter future engagement than older cohorts might have done historically, due to regulatory and tax pressures.
The direction of travel here seems to suggest gradual exits and portfolio contraction by small-scale landlords - a net reduction in the number of small-scale landlords. There are also fewer new entrants, with new buy-to-let mortgage authorisations roughly halving in a short span, signalling fewer new small-scale landlords entering the market.
However, other landlords are expanding, buying and consolidating existing portfolios.
Tenants staying longer offer stability, but without landlord market stability. It has not translated into small-scale landlord retention; the two phenomena are moving in opposite directions. Tenants want to stay longer; landlords are operating in a more challenging environment.
Despite frequent claims of a cooling rental market, demand for rented housing in the UK remains resilient. Population growth, net migration, delayed home ownership and affordability constraints continue to push households towards the private rented sector (PRS).
Countervailing forces: tenants face higher rents and tighter choice while landlords are facing rising costs, lower productivity and increased regulatory pressures. This is not a healthy balance in the market, which is leading to constrained supply.
There is now ample evidence that the supply of privately rented homes is under strain. Small landlords, particularly those with one to five properties, are continuing to sell or rationalise portfolios. The reasons are well explained above: mortgage costs, tax changes, new energy efficiency requirements, and new regulatory challenges.
While headline rental demand remains strong, the loss of lower-end stock has been especially acute. The irony is stark: reforms intended to protect tenants are contributing to the shortages that make the market harsher for them.
Rent inflation has slowed during the current year, but that should not be confused with improving tenant affordability. Wage growth has not caught up with post-pandemic rental increases, and unemployment is increasing. Many households are simply absorbing higher costs by reducing spending elsewhere.
For landlords, slower rent growth does not help profitability and it coincides with rising compliance and maintenance costs, leaving net income yields under pressure.
Abolition of Section 21 and fixed terms (effective May 2026) are the most significant legal development of the year with the passage of the Renters’ Rights Act. This is not incremental reform; it is a fundamental shift that alters the landlord-tenant relationship.
The abolition of Section 21 “no-fault” evictions and fixed-term assured shorthold tenancies removes a core risk-management tool that landlords have relied on for over 40 years. In its place comes the default Section 8, an adversarial legal process for the new periodic tenancies, with possession possible only by using certain prescribed grounds.
The process undoubtedly creates more security for tenants, but it transfers considerable risk to landlords, in particular smaller landlords with limited financial resources.
The government has repeatedly emphasised strengthened possession grounds for landlords who need to sell or regain possession. But the effectiveness of these grounds depends entirely on court capacity and enforcement speed — both of which remain highly problematic.
For small-scale landlords, the new regime is not one of ideology, its greater exposure to risk. A single non-paying tenant, or a prolonged dispute, can turn to loss-making very quickly, risking repossession if mortgage payments cannot be maintained.
The Act restricts rent increases to once per year and ties them to market evidence, with tenants able to challenge increases via tribunals at will and for free. While ostensibly not rent control, the direction is clear and many industry experts have labelled it “rent control by another name”. This will matter most to landlords with borrowing costs, those landlords with older property stock in need of upgrading or with higher maintenance costs. And with the ever-increasing cost of building materials and repairs, they rely on incremental rent increases to fund compliance and repairs.
Local authorities now have stronger enforcement tools – if they have the resources to use them as intended - including higher civil penalties and expanded investigatory powers. Serious breaches can attract fines of up to £40,000.
While rogue landlords undoubtedly deserve attention, enforcement rarely distinguishes neatly between the rogues and the responsible landlords. Small-scale landlords without specialist knowledge and legal support are disproportionately exposed.
Professionalisation of the sector is the constant message from government. Amateurism is no longer to be tolerated: record-keeping, licensing, deposit handling, energy compliance and tenant communication are all integral features of the new Act intended to strictly enforce professional standards.
The result is: landlords, agents and advisers’ management time and costs will increase considerably.
Tax increases and reporting burdens continue to squeeze profits. The staged rollout of Making Tax Digital for income tax will require quarterly reporting for many landlords, increasing the administrative burden. As renting property is an investment not a trading business according to HMRC, unlike businesses in other sectors, landlords receive no offsetting incentives for reinvestment, improvement or risk.
Higher stamp duty surcharges on additional properties have raised the cost of entry, discouraging new supply and the 2025 Autumn Budget’s 2 per cent extra on rental income tax further degrades profitability.
For family landlords, as with other businesses, new inheritance tax rules create a structural problem. And unlike trading businesses, most rental portfolios whether personal or within a limited company, attract no meaningful reliefs. Combined with tenancy law changes that complicate timing of sales, this all creates genuine long-term tax planning risks.
Minimum EPC standards were politically delayed but by no means abandoned. The expectation remains that landlords will be required to upgrade their property stock often at significant cost to themselves and only limited grant support.
Again, the strain falls most on smaller landlords with older properties who face the worst economics: high capital expenditure, uncertain recovery through rent, and regulatory deadlines that ignore local market realities.
Divergence is the predominant trend. Commercial property performance remains uneven with logistics warehousing and industrial assets showing resilience while retail and secondary offices continue to struggle. For small commercial landlords — often owning a handful of local units — vacancy risk and tenant insolvency are persistent threats. Vacancies, for commercial landlords, quickly turn an asset into a liability with business rates, insurance, utilities and security costs all falling on the landlord.
Business rates continue to have a distorting effect on the commercial market. Reliefs exist but they are complex, temporary and change at every budget. Recent cases highlight how aggressively authorities pursue rates of arrears due either by tenants or landlords. Again, scale matters because larger landlords can absorb the financial shocks; small ones feel them immediately.
The Autumn Budget 2025 focused more on residential landlords, but key commercial impacts include potential bans on Upwards-Only Rent Reviews (UORRs) via the Devolution Bill, and reduced business rate reliefs. The UORRs ban will create yet another distorting influence of the commercial property market.
Successive governments have been unsupportive of landlords with the policies that have emerged, but under the current regime it would seem landlords are a particular political target. The sector is increasingly portrayed as extractive rather than essential, despite providing housing for millions who cannot access ownership or social housing.
It is unlikely there will be a reversal; there’s no serious political movement on the horizon advocating deregulation of the sector or tax reform in favour of landlords. The direction, it seems, is firmly towards greater tenant protection, more enforcement, and higher standards — regardless of the consequences on supply.
Faced with this operating environment landlords must make choices: they must decide whether to (1) consolidate into higher-quality assets, (2) professionalise management, (3) restructure ownership, or (4) do all three, or (5) downsize or exit the sector.
The likely outcome is fewer landlords, larger portfolios, and greater institutional presence in the build-to-rent sector. Whether this benefits tenants in the long run remains to be seen. Small-scale responsible landlords – by far the majority - have traditionally given good service, quality well managed accommodation while receiving high levels of tenant satisfaction. This is not likely to transfer well to large scale operations.
2025 was not just another difficult year for landlords, it marked a structural shift. Legal reform, tax policy and political intent are now aligned in a way that prioritises tenant security over landlord flexibility.
For small and medium-scale landlords, the message is blunt: this is a more regulated, more risky and less forgiving environment. Those who remain will need to operate with the mindset of regulated businesses, not casual investors.
Whether this ultimately improves housing outcomes is far from certain. What is certain is that the private rented sector of the next decade will look very different from the one that built much of today’s private rented sector.
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