The total value of homes within the UK’s private rented sector (PRS) dropped by £48 billion in 2025, representing the largest yearly decline recorded this century. The figures come from new analysis by Savills, which highlights significant changes taking place within the housing market.
Over the last three years, the PRS has reduced in value by a total of £79 billion, even though the broader UK housing market has continued to expand during the same period. This shift reflects a growing trend of smaller landlords selling their properties, often to owner-occupiers or to larger landlords who already manage extensive portfolios.
Despite the contraction in the rental sector, the overall value of the UK’s housing stock has increased. Savills estimates that the total national housing market grew by £336 billion over the same three-year period, representing a 3.8% rise in value.
Among all housing tenures, the private rented sector stands out as the only one to have experienced a decline. During the past three years, the value of PRS housing has dropped by 5.1%, contrasting with growth seen in other parts of the market.
Landlord Sales Reshaping the Sector
The reduction in the size of the rental sector is largely being driven by the decisions of smaller landlords to leave the market. Many have chosen to sell their properties as they reassess the financial and regulatory pressures associated with owning rental homes.
According to Lucian Cook, head of residential research at Savills, the PRS has expanded steadily over the past 25 years, often growing at the same time that homeownership became more difficult for many buyers. However, recent developments in housing policy and lending conditions are beginning to alter that long-standing pattern.
Cook explained that a combination of factors is influencing landlords’ decisions. Changes to tenancy legislation, rising operating costs and higher mortgage interest rates have all contributed to many landlords reconsidering the future of their rental portfolios.
Larger Landlords Filling Some of the Gap
While many smaller landlords are exiting the sector, larger portfolio landlords have stepped in to purchase some of the properties being sold. These landlords are typically better positioned to manage regulatory requirements and absorb rising costs.
This trend has contributed to what analysts describe as a gradual professionalisation of the rental sector, with more homes being owned and managed by larger, more experienced property investors.
However, not all properties sold by landlords remain within the rental market. A significant portion has been bought by owner-occupiers, which directly reduces the number of homes available to rent.
Owner-Occupied Housing Continues to Grow
While the PRS has been shrinking, the owner-occupied housing sector has continued to expand in value. Savills estimates that homes owned by occupiers increased in value by £185 billion during 2025 alone.
This growth has been driven by both homeowners with mortgages and those who own their properties outright. Activity from first-time buyers has also played a role in strengthening the owner-occupied segment of the market.
The rise in privately owned housing since 2022 has been supported in part by increased borrowing among homeowners. As mortgage lending has grown, it has contributed to the overall increase in property values within the owner-occupied sector.
Mortgage Borrowing Also Rising
Savills notes that the total amount of outstanding mortgage debt held by owner-occupiers has grown by around 4.7% over the past three years. This rise reflects both higher borrowing levels and the continued demand for homeownership among buyers.
A Changing Landscape for the Rental Market
Taken together, these trends suggest that the UK housing market is entering a period of adjustment. While the private rented sector had expanded steadily for decades, a combination of economic pressures and regulatory changes is now reshaping its structure.
With smaller landlords leaving and larger investors acquiring some of the available properties, the sector may continue to evolve into a more consolidated market. At the same time, increased activity among owner-occupiers means more homes are shifting away from the rental sector entirely.
The data from Savills suggests that although the wider housing market remains resilient, the private rented sector is undergoing a notable transformation that could influence the supply of rental homes in the years ahead.
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