As a buy-to-let landlord of 15 years, Neil France had a feeling things were about to get worse for him and his sector.
“You’ll never lose votes for hammering a landlord. That’s the reality,” France, 68, said. “It used to be estate agents and bankers; now it’s landlords.”
He was right. In a surprise move, Rachel Reeves announced in her November budget that from April 2027 tax due on the income people received from property would rise by two percentage points. The increase will mean that basic-rate taxpayers will pay 22% on any income they receive from a rented property, while higher-rate taxpayers will pay 42%, and additional-rate taxpayers 47%.
“It will cost me an extra £2,500 a year,” said France, who owns seven properties in Merseyside and Essex, including three homes in Chelmsford, which are houses of multiple occupancy.
“I can’t absorb that kind of hit. We’ve already been hammered by rising interest rates and other changes to the sector, and I’ve tried to feed that through gently to tenants. But I had to write to all of them and say I’ve had to do some recalculations and rents will be going up again from next year.”
The buy-to-let landlord may not quite be an endangered species, but being one is less lucrative than it used to be. Successive governments have tightened rules, forced into action by horror stories of tenants being charged extortionate rents for tiny, unsanitary homes, or being abruptly evicted despite having done nothing wrong. Squeezing out landlords was also intended to make it easier for first-time buyers to get on to the property ladder by reducing competition for one- and two-bedroom properties.
Higher interest rates have left many with thin margins and dwindling profitability. About 80% of buy-to-let mortgages are interest-only, while half of landlords in the UK receive less than £10,000 of profit annually, according to research from HM Revenue and Customs.
Other costs for landlords have been rising, too. The requirement to make all rental homes have a minimum energy performance certificate rating of C by 2030 will require renovations for many, on top of the 170 regulations that landlords must now abide by. The recently passed Renters’ Rights Act will also bring in regulation changes that are likely to add to landlords’ bills.
This comes on top of the winding down of mortgage interest tax relief – the perk that allowed landlords to deduct mortgage expenses from rental income to reduce their tax bill, but which was slashed by George Osborne during his tenure as chancellor. There is also the additional stamp duty of at least 5% paid on the purchase of rental homes, and a reduction in the tax-free allowance for capital gains tax from £12,300 to £3,000.
The result has been a steady departure of landlords, with research from the estate agency Hamptons showing that the share of homes bought by a landlord in Britain dropped from 15.8% in 2015 to 10.8% in 2025. That is the lowest level since 2007, when Hamptons started collecting data.
Separate analysis by Savills suggests that about 200,000 properties were removed from the rental market in the 12 months to the end of March.
Lucian Cook, the head of residential research at Savills, said: “While the two percentage point tax increase in itself is not enough to tip landlords over the edge, it comes on the back of a series of changes that is likely to accentuate the next wave of smaller landlords saying: ‘You know what? It’s no longer worth the hassle.’”
Philip Waters, 62, is planning to leave the sector after being a landlord in Norwich for 20 years, with four properties.
“It’s just becoming far more difficult for private, smaller landlords – almost impossible. The government is clearly wishing for corporates and pension companies to run the rental sector,” he said.
Ben Beadle, the chief executive of the National Residential Landlords Association, said: “It beggars belief that the government thinks it is helping renters. Piling on further tax rises that will drive up rents, while keeping housing benefit rates frozen, is a one-way street to hitting low-income tenants the hardest.”
But for many prospective first-time buyers struggling to get on to the property ladder, there is unlikely to be much sympathy for landlords.
Policies appear to be working. A record 33% of all homes sold across Britain in 2025 went to first-time buyers, according to research from Hamptons.
Aneisha Beveridge, the head of research at Hamptons, said: “In percentage terms, the proportion of first-time buyers has pretty much doubled from about 12% to 15% of all homes a decade ago to 33% today. So I think having a little bit less competition from investors has helped some first-time buyers.”
Ben Twomey, the chief executive of Generation Rent, a non-profit campaigning group for private renters, said the threat of mass sales from landlords “should be taken with a large pinch of salt”.
He argued that most landlords were able to absorb an increase in tax.
Twomey added: “Regardless of costs, landlords find it all too easy to raise rents anyway when wages are rising and building new homes slows down. While the Renters’ Rights Act will stop landlords evicting tenants just to raise the rent, it will still be possible for landlords to force rents up in line with speculative adverts. Renters still need real protections from unaffordable rent increases.”
However, many landlords and some economists argue the changes may soon become counterproductive. In England alone, there are still about 4.7m households (11 million people) who rent their home from a private landlord. Fewer landlords to cater to that market means greater demand and higher rents, the argument goes, which in turn makes it harder for someone to save for a deposit.
That was the verdict of the Office for Budget Responsibility after the latest autumn budget. The OBR warned that the “successive eroding of private landlord returns” was likely to reduce the supply of rental property over the longer run, adding: “This risks a steady long-term rise in rents if demand outstrips supply.”
Nor is homebuilding helping to fill the void, with Labour well behind on its target of building 1.5m homes by the end of the decade. Only 208,600 homes were built or converted to residential use in the year to March 2025, the smallest figure since 2016.
The UK has a dwindling amount of social housing. Only 12,198 new social rent homes were built in England in the year to March 2025. Although this was the highest figure since 2013, there has still been a net loss of 180,000 social rented homes over the last 10 years, according to the housing charity Crisis.
Some of the shortage in rental properties is now being addressed by build-to-rent developments. These are typically high-rise apartment block developments bankrolled by institutional investors and purposely built for rent. Investors put just over £800m into UK build-to-rent properties in the third quarter, taking the nine-month total to £2.6bn, ahead of last year, according to Savills.
However, the total size of the build-to-rent sector so far stands at just 298,000 homes.
Beveridge, at Hamptons, said: “Build-to-rent makes up about 2% of all privately rented homes in Great Britain. So it is still very much in its infancy. It’s helping fill some of the gap but is nowhere near enough.”