Nearly £50bn has been wiped from the value of Britain’s rental market as landlords flee the sector, new research shows.
The value of privately rented homes contracted by 5pc last year, according to data from estate agent Savills, representing a £48bn decline.
This was the third successive year that values in the sector had fallen, taking the total loss to £79bn since 2022.
Lucian Cook, of Savills, said the exodus of smaller landlords under growing financial and regulatory pressures had contributed to the sector’s dwindling value.
He said: “Changes in tenancy legislation, higher operating costs and increased mortgage rates have prompted many private landlords to reassess their portfolios. It’s become harder for people to expand and maintain their portfolios.”
He added that Rachel Reeves’s decision to raise the stamp duty surcharge from 3pc to 5pc in her maiden Budget had “inhibited” growth in the sector.
The figure compared with a £185bn rise for owner-occupied properties in 2025, which was bolstered by first-time buyers coming to the market and older homeowners becoming mortgage-free, Savills said.
Landlords have faced a growing number of tax and regulatory hurdles since Labour took office in 2024.
As well as stamp duty rises, income tax on private rentals is set to increase by two percentage points from April 2027. This means additional-rate taxpayers will face rates as high as 47pc.
Landlords have been increasingly quitting the market ahead of the increased red tape burden. One in three were considering exiting the market, according to property website Rightmove, and 65pc said they felt unsupported by the Government.
Approvals for new buy-to-let mortgages – including remortgages – have also sunk by more than a third since their peak in 2015, according to lender trade body UK Finance.
The Renters’ Rights Act, which is set to come into effect in May and will give greater powers to tenants, could encourage more investors to sell up, particularly for those approaching retirement age, Mr Cook said.
The bill will limit rent increases, make it more difficult to evict tenants and end fixed-term tenancies.
This is combined with high interest rates, low rental yields and sluggish property price growth in London and the South East, which have acted as a squeeze on finances.
The average gross rental yield in London as of September last year was just 5.1pc, compared with 7.9pc in the North East, according to property portal Zoopla.
Mr Cook added that the sale of higher-value properties to the owner-occupied market and the purchase of lower-value properties with higher yields in the North had contributed to the private rental sector’s decline.
Meanwhile, robust demand from first-time buyers has helped push up the value of owner-occupied properties.
Mortgage lenders forwarded a record £82.8bn of mortgage debt to 390,000 first-time buyers in the year to September 2025 – a 30pc increase on the previous year, according to analysis by Savills.
