The government has unexpectedly released new data that sheds light on the troubling state of the private rental sector. The figures, drawn from a recent HMRC survey, reveal a concerning trend—around one in four landlords are planning to sell off their properties within the next year.
The findings also highlight that the majority of landlords in the UK are small-scale, often operating on an amateur basis and making relatively modest profits from their rental activities.
The survey, carried out by Ipsos on behalf of HMRC, involved 1,243 landlords and explored a wide range of aspects related to property investment, management, and tax compliance.
This comprehensive research aimed to better understand the experience of landlords across the UK, focusing on both general property ownership and the specific ways in which landlords manage their investments.
Key areas of investigation included landlord investment behaviour, use of letting agents and accounting tools, and the geographic spread of their property portfolios.
The study also examined perceived challenges landlords face when filing accurate tax returns, an area that can often be complex for those not working full-time in the property sector.
Ipsos employed a mixed methodology for the study, combining a quantitative survey delivered online and by phone with in-depth follow-up interviews lasting between 45 and 60 minutes.
These interviews aimed to gain deeper insight into landlord motivations, future intentions for their property businesses, and any need for support in managing their tax responsibilities.
The full summary, compiled by HMRC and shared publicly by the government this week, provides a detailed snapshot of the current climate facing landlords in the UK.
This research paints a clear picture of the uncertainty many landlords are experiencing, and the possible implications for the wider rental market in the months ahead.
- How Landlords Own Their Properties
Most landlords in the UK tend to own their properties in their own name, with around 93% holding assets individually. A smaller group owns property through a limited company (7%) or a partnership (5%).
The majority of landlords have invested in unfurnished residential properties, making up 72% of all holdings, while 26% manage furnished lets. In terms of portfolio size, over half of all landlords (55%) own just one rental property, though the average ownership stands at three properties.
Geographically, the highest concentration of rental properties can be found in the South East (22%) and London (16%). Interestingly, landlords in Scotland and the North East typically own a higher number of properties on average—four per person in these regions.
A significant proportion of landlords reported earning relatively low income from their investments. Almost two-thirds made less than £20,000 in gross rental income annually, and over half said their yearly profit was under £10,000.
Ownership structures appeared to impact income and asset types. Company landlords were more likely to own commercial buildings and reported higher earnings, with nearly half earning more than £20,000 annually. On the other hand, 83% of individual landlords earned less than £50,000 from rent, compared to just 48% of those with company-owned properties.
- Investment Patterns and Property Ownership Motivations
Landlords come into property ownership through various means. While 60% bought their properties specifically as an investment, a notable 40% either inherited them, received them as gifts, or had once lived in them as their primary residence.
Regardless of how they acquired their properties, many landlords cited long-term financial security as a main reason for holding onto them. Roughly 71% of investors and 67% of non-investor landlords valued property for its stability. The fact that it’s a tangible, physical asset was another common motivation, mentioned by 69% and 64% of each group respectively.
Insights from follow-up interviews suggest that landlords generally see property as a long-term investment. Many believe that increasing property values and rising rents will lead to solid capital gains over time, justifying the ongoing costs of maintaining rental homes.
Looking ahead, the majority of landlords (73%) plan to retain their current number of properties over the next year. However, around 24% are thinking of reducing their portfolios, a figure that jumps to 33% when considering a five-year timeframe. Despite this, over half (53%) said they had no plans to sell any of their properties within the next five years.
Most landlords use rental income to supplement their primary earnings (78%), while only 19% rely on it as their main source of income.
- Tax Management and Use of Letting Agents
Landlords generally showed awareness of the basic tax requirements linked to rental property. However, 49% opted to work with an accountant to manage their tax obligations, while 43% handled everything themselves.
Interviews revealed that those who hired accountants often did so because they lacked the time or expertise to complete their returns, especially as tax legislation continues to evolve.
Despite these challenges, landlords found the process of preparing and filing tax returns to be mostly manageable. About 62% of those who filed their own taxes and 68% of those who used professionals said they found it easy to get everything ready.
The biggest challenge cited was the complexity and confusion around the tax rules, mentioned by 40% of respondents. This was followed by a lack of tax knowledge (19%) and the volume of work involved (12%).
In terms of property management, nearly two-thirds (63%) of landlords rely on third parties such as letting agents, estate agents, or property managers to oversee their rental properties and tenant interactions.
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