London Landlords Selling Up: Rental Supply, Rising Rents and the Buy-to-Let Position
Updated 05 May 2026
For landlords with property in or around London, the market has shifted noticeably through the first half of 2026. Rental supply is below five-year averages, the Renters’ Rights Act came into force on 1 May 2026, and a growing number of single-property landlords are deciding the cumulative weight of regulation, tax and rate pressure no longer fits their plans. This article sets out the data behind the trend, the legislation now in force, and what it could mean for landlords reviewing whether to sell, refinance or restructure their borrowing.
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For a free initial consultation about a buy-to-let purchase, sale, refinance or portfolio review, call 01202 155992 or contact Mortgage One.
The Numbers Behind the London Rental Squeeze
Available rental supply in London tightened through 2025 and into 2026. Rightmove data showed that new lettings listings in prime central and outer London in January 2026 were around 13 per cent below the five-year average, with overall listings down by roughly a third compared with January 2019. Across the broader market, the share of rental listings being reduced in price reached around 26 per cent in the first quarter of 2026, the highest level Rightmove has recorded since it began tracking that metric in 2012.
Rents have continued to rise, although the pace has slowed sharply. Office for National Statistics data showed UK private rents up 3.4 per cent in the 12 months to March 2026, with the average UK monthly rent reaching £1,377. Rental inflation in England was 3.4 per cent over the same period, the lowest annual rate in four years, and London recorded the slowest growth of any English region at 1.7 per cent. Hamptons projects rental growth across Great Britain at 3.5 per cent in the fourth quarter of 2026, supported by a structural supply shortage that has persisted in spite of recent improvements in tenant demand.
Why Landlords Are Selling: The Cumulative Pressure
Few landlords cite a single reason for exiting the sector. The picture, drawn from recent industry surveys, is one of layered pressure. An Allsop survey of more than 1,000 landlords published in early May 2026 found that around 30 per cent of respondents planned to sell all of their let properties, with a further 18 per cent planning to reduce portfolios. Among single-property landlords, 51.8 per cent said they were unlikely to continue letting following the abolition of Section 21 evictions. By contrast, 44 per cent of landlords with 26 or more properties said they planned to maintain or grow their investment. The pattern is consolidation: smaller landlords leaving, larger and more institutional landlords selectively holding or expanding.
The drivers most often cited combine the Renters’ Rights Act with mortgage rate increases since 2022, the phased removal of mortgage interest relief for personal-name landlords (Section 24), the Stamp Duty Land Tax surcharge on additional properties, and the EPC requirements that will see all privately rented homes needing to meet at least an EPC C rating by 2030 unless exempt. None of these in isolation would necessarily prompt a sale. In combination, they have shifted the maths for landlords whose net yield has narrowed each year. Tax treatment varies significantly between personal name and limited company structures, and you should speak to a qualified accountant about your specific position before making structural changes.
What the Renters’ Rights Act Changes for Existing Tenancies
The Renters’ Rights Act came into force on 1 May 2026 in England. From that date, Section 21 “no fault” evictions were abolished, and almost all existing assured shorthold tenancies converted automatically into periodic assured tenancies. Fixed-term tenancies as a structure ceased for new lets, replaced by rolling monthly arrangements that tenants can end on two months’ notice. Landlords must now use Section 8 grounds and the court process to regain possession, and rent increases must be made via a Section 13 notice limited to once per 12 months. A new possession ground 4a was introduced to allow student HMO landlords to regain possession ahead of the new academic year, subject to the property meeting the student test and tenants having received a written statement by 31 May 2026. The Act does not apply in Scotland or Wales, which operate under their own devolved tenancy regimes.
To talk through your specific portfolio position, refinancing options or limited company structure, call 01202 155992 or contact Mortgage One.
Refinancing in a Smaller Rental Market: Lender Considerations
For landlords who are not selling, the lending environment has continued to develop. The Bank of England held Bank Rate at 3.75 per cent on 30 April 2026, the third decision in a row without a cut, which feeds through into how lenders price both fixed and tracker buy-to-let products. Average two-year buy-to-let fixed rates remain elevated compared with pre-2022 norms, and lenders continue to apply interest cover ratio (ICR) tests at stressed rates that vary by tax status, product term and property type. Common stress tests sit around 125 per cent ICR for limited company and basic-rate taxpayer cases, and 145 per cent for higher-rate personal-name lending, with stressed rates that lenders adjust as swap rates move.
For a remortgage in the current environment, the strongest applications tend to be those where the rental income comfortably clears the lender’s stress test, the property is in good repair, the borrower has clean income evidence and any portfolio data is presented in a clear schedule. Mortgage One has access to whole of market lending for buy-to-let, including high-street, specialist and limited company lenders, and can review which lenders are most likely to suit a specific case. The buy-to-let mortgage guide covers how lenders assess rental income and what distinguishes a buy-to-let application from a standard residential case.
Limited Company, Portfolio and Holiday Let Routes
For landlords reconsidering structure, the choice between continuing to hold property in personal name, refinancing into a limited company, or shifting to alternative letting strategies can reshape the underlying maths. Personal-name landlords on higher rates of income tax see only a 20 per cent tax credit on mortgage interest, which has materially reduced net yields for portfolios funded with debt. Limited company structures pay corporation tax on rental profits and allow full deduction of mortgage interest as a business expense, although the borrowing market for special purpose vehicle lending is narrower than personal-name buy-to-let, and incorporating an existing portfolio can trigger Stamp Duty Land Tax and capital gains tax charges. The limited company buy-to-let guide covers how lenders assess SPV applications, and the portfolio landlord rules guide covers how the Prudential Regulation Authority framework applies once you reach four or more mortgaged properties.
What This Could Mean if You Are Thinking of Selling
For landlords considering a sale, the practical questions are timing, tax position and what to do with any remaining mortgage. Capital gains tax allowances have been reduced significantly in recent years, and the rate at which gains are taxed depends on your overall income position. You should speak to a qualified accountant or tax adviser before listing a property. Mortgage-side considerations include early repayment charges on the existing deal, the timing of any redemption against the fixed-rate term, and whether a partial sale or refinance might better suit the cashflow position. Some landlords are choosing to sell a single low-yielding property and refinance the rest at a lower loan-to-value, rather than exit the sector entirely. Others are restructuring through a limited company before adding to the portfolio. The right route depends on the specific portfolio, the income position and the timing of existing mortgage deals.
If you are weighing whether to sell, hold, restructure or expand in the current market, call 01202 155992 or contact Mortgage One.
The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.
Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.
FAQs
1. Has the Renters’ Rights Act actually come into force?
Yes. The main provisions of the Renters’ Rights Act 2025 came into force on 1 May 2026 in England. From that date, Section 21 “no fault” evictions were abolished and most existing assured shorthold tenancies converted automatically into periodic assured tenancies. Phase 2 provisions, including the landlord database and the Private Landlord Ombudsman, will be rolled out from late 2026 onwards.
2. Are landlords actually leaving the market or is this overstated?
Both can be true. Industry surveys show a high proportion of single-property landlords saying they are likely to exit, while larger portfolio landlords are mostly holding or expanding. The result on the ground is consolidation rather than collapse, with London rental stock falling but a smaller, more professional cohort remaining. Independent data from Rightmove confirms that London new lettings listings have fallen below five-year averages.
3. Should I sell my buy-to-let now?
This is a personal commercial and tax decision and not one a mortgage broker can answer for you. The relevant questions usually include your net yield after tax, your remaining loan term, any early repayment charges, the property’s likely future value and your wider portfolio plan. A qualified accountant should advise on the tax position before you list. Mortgage One can review the lending side and explain refinancing, restructuring or exit options.
4. Can I switch from personal name to a limited company structure?
You can incorporate, but it usually involves the property being sold from your personal name to the company, which can trigger Stamp Duty Land Tax and capital gains tax charges. Some landlords use a limited company structure for new acquisitions only, leaving existing personal-name properties in place. The limited company buy-to-let market exists but is narrower than personal-name lending, and rates and fees often sit higher. Speak to a qualified accountant on the tax side and a broker on the lending side before deciding.
5. Will rents keep rising if landlords keep selling?
Forecasts vary. Hamptons projects 3.5 per cent rental growth across Great Britain in the fourth quarter of 2026. Zoopla expects 2 to 3 per cent for the year. A continued reduction in supply tends to support rents over time, although demand has softened from the post-pandemic peak. Regional variation is significant: northern markets like the North East have seen stronger growth at 6.5 per cent in the year to March 2026, while London growth has been the slowest at 1.7 per cent.
6. Does the Renters’ Rights Act apply to my buy-to-let in Scotland or Wales?
No. The Act applies to England only. Scotland operates under the Private Residential Tenancies regime, and Wales under the Renting Homes (Wales) Act. Devolved housing legislation has a separate timeline and separate rules.
7. What happens to my fixed-term tenancy that started before 1 May 2026?
On 1 May 2026, almost all existing assured and assured shorthold tenancies converted automatically into assured periodic tenancies, ending fixed terms and abolishing Section 21. There is one exception: a tenancy will not have converted if a valid Section 21 or Section 8 notice was served before that date and possession proceedings have not yet concluded. Government guidance and your letting agent should confirm any tenancy-specific position.