Why 39% of Landlords Are Reconsidering Their Portfolios in 2026

The private rented sector is at a crossroads. Survey after survey paints the same picture: a significant proportion of landlords are questioning whether the numbers still add up. The latest industry data suggests that 39% of landlords are actively reconsidering their portfolios, with many citing a perfect storm of regulatory change, rising costs, and policy uncertainty.

But behind the headline figure lies a more nuanced story. While some landlords are heading for the exit, others see an opportunity. Understanding which pressures are temporary and which are structural is the key to making sound decisions in 2026.

The Renters' Rights Act: a new rulebook

The Renters' Rights Act is about to fundamentally rewrite the relationship between landlord and tenant. From 1 May 2026, Section 21 "no-fault" evictions will be abolished, replaced by a reformed Section 8 process that requires landlords to demonstrate specific grounds for possession. All tenancies will become periodic by default, giving tenants greater security but reducing landlords' flexibility.

A new private rented sector ombudsman adds another layer of oversight, and the property portal requirements mean every rental must be registered and compliant before it can be let. For landlords who previously managed their properties informally, the administrative burden has increased substantially.

EPC compliance: a looming deadline

The government's target to bring all rental properties to a minimum EPC rating of C by 2030 is concentrating minds. Depending on the property, achieving that standard can mean anything from relatively inexpensive loft insulation to a full retrofit involving wall insulation, heat pumps, and new windows.

The government has set a cost cap of £10,000 per property, though older, solid-walled homes can easily exceed that figure. Average upgrade costs are estimated at £6,000–£7,000, but vary widely depending on the property. For landlords with multiple properties, the total outlay can be eye-watering, particularly when the return on that investment is uncertain.

• Band D or E properties typically require £5,000–£15,000 of work
• Band F or G properties may need £15,000–£30,000 or more
• Listed buildings and conservation areas face additional constraints that can push costs higher still

With the deadline approaching, landlords who delay risk a last-minute rush that inflates contractor costs further. Those who act now at least have the advantage of time to plan and phase the work.

Mortgage rates: the squeeze continues

Although mortgage rates have eased from the peaks seen in late 2022 and 2023, they remain significantly elevated compared to the sub-2% deals many landlords locked in during the pandemic years. Buy-to-let rates in the 4–5% range are now the norm, and for some landlords, the gap between rental income and mortgage payments has narrowed to the point where positive cash flow has all but disappeared.

Refinancing events are particularly painful. A landlord whose fixed-rate deal is expiring may find their monthly payments jumping by hundreds of pounds, turning a profitable property into one that barely breaks even.

Tax changes: the long erosion

The phased removal of mortgage interest relief, which concluded several years ago, continues to bite. Landlords can now only claim a basic rate tax credit rather than deducting mortgage interest as an expense, which disproportionately affects higher-rate taxpayers.

Capital gains tax on property disposals adds another disincentive. For landlords who bought at lower prices, the accumulated gains can result in a substantial tax bill on exit. Combined with the 5% stamp duty surcharge on additional property purchases, the tax environment has become considerably less favourable than it was a decade ago.

The case for staying

Set against these pressures, there are genuine reasons for optimism. The fundamental supply-demand imbalance in the UK rental market shows no sign of resolving. Housing completions remain well below the levels needed to meet demand, and the departure of smaller landlords is actually reducing supply further, which in turn supports rents.

Rental growth has been robust. While the pace of increases has moderated from the double-digit figures seen in some regions during 2022 and 2023, most forecasters expect steady growth of around 2% per annum over the medium term. For landlords with manageable debt levels, yields remain attractive relative to other asset classes.

There is also an acquisition opportunity. As smaller landlords exit, properties are coming to market at realistic prices. Professional landlords and portfolio investors are selectively buying, taking advantage of reduced competition from owner-occupier buyers in some segments.

The professionalisation of the PRS

What we are witnessing is not so much a crisis as a structural shift. The days of "accidental landlords" who bought a second property and managed it with a spreadsheet and a filing cabinet are drawing to a close. The regulatory and compliance requirements now demand a professional approach.

This is not necessarily a bad thing. A more professionalised private rented sector should mean better-maintained properties, more reliable landlords, and higher standards for tenants. But it does mean that the bar for entry and ongoing operation is higher than it used to be.

The landlords who are thriving tend to share certain characteristics:

• They treat it as a business, with proper systems for compliance tracking, financial management, and tenant communication
• They stay ahead of regulation, adapting to new requirements before deadlines rather than scrambling at the last minute
• They focus on tenant retention, recognising that void periods and turnover costs are often more damaging than a below-market rent increase
• They use technology to reduce the administrative burden and keep on top of certificate renewals, maintenance schedules, and tenancy milestones

Practical steps for 2026

If you are a landlord weighing up your options, the following steps can help you make a clear-eyed assessment:

1. Audit your compliance position. Check every property against current regulations: gas safety, electrical safety, EPC ratings, smoke and carbon monoxide alarms, and deposit protection. Identify any gaps before they become enforcement issues.
2. Model your finances properly. Calculate your true yield after mortgage costs, insurance, maintenance reserves, and tax. If a property is not delivering an acceptable return, consider whether capital could be better deployed elsewhere.
3. Plan for EPC upgrades now. Get quotes, explore available grants, and phase the work to manage cash flow. Waiting until 2029 is a strategy that is likely to cost more.
4. Invest in tenant relationships. A good tenant who stays for years is worth far more than marginal rent increases. Responsive maintenance and clear communication go a long way.
5. Reduce your admin overhead. The less time you spend on paperwork, the more time you have to focus on strategy and property performance. This is where the right tools make a real difference.

How Rental1 helps landlords stay on top

Rental1 was built specifically for UK landlords navigating this environment. The platform automates compliance tracking, alerting you before certificates expire and deadlines pass. It centralises tenancy management, financial records, and property documentation in one place, replacing the patchwork of spreadsheets and paper files that too many landlords still rely on.

By reducing the administrative burden, Rental1 gives landlords more time to focus on the decisions that matter: which properties to hold, where to invest, and how to deliver the best experience for their tenants. In a market that increasingly rewards professionalism, having the right systems in place is not optional. It is a competitive advantage.

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