More than two in five landlords (42%) are considering reducing the size of their property portfolios, despite ongoing increases in rental demand and stronger yields, according to new research from Aldermore’s Buy to Let Index.
The findings highlight growing concern about the long-term stability of the private rental sector, particularly as demand for rental homes continues to rise while investor confidence shows signs of weakening.
Strong yields but rising hesitation
The research shows that landlord performance has improved for many, with nearly half (47%) reporting higher rental yields over the past year. On average, yields have increased by 7.2%, while around 18% of landlords have seen gains of 10% or more.
Despite this, almost 45% of landlords say current market conditions are making it difficult for them to expand their portfolios. This suggests that while returns are improving, appetite for further investment is being constrained by wider pressures in the sector.
Shift away from expansion
Although there is no clear evidence of a mass sell-off, the data suggests that overall investment activity in the buy-to-let market has slowed. Many landlords appear to be adopting a more cautious approach, focusing on maintaining rather than growing their portfolios.
Among those considering exiting the sector entirely, several key concerns stand out. Increased regulation, including changes linked to the Renters’ Rights Act, is cited by 43% of respondents. Tax-related changes are highlighted by 39%, while 37% point to rising maintenance costs as a key factor influencing their decision.
In addition, 55% believe that higher taxes on property, dividends and savings could push them to leave the sector altogether. Around 30% also feel that landlords are being unfairly blamed for wider issues in the housing market.
Growing pressure on landlords
Jon Cooper, Director of Mortgages at Aldermore, said the findings point to a clear imbalance in the private rental sector. While tenant demand remains strong and rental yields are improving, he noted that increasing regulation, tax changes and cost pressures are making landlords more cautious about expanding.
He added that it is important for the long-term health of the private rented sector that landlords feel supported to continue investing and maintaining quality rental accommodation.
Outlook for the rental market
The results suggest a private rental sector at a crossroads. On one hand, tenant demand and rental returns remain resilient. On the other, increasing financial and regulatory pressures are limiting landlord expansion and prompting a growing number to consider exiting the market.
If this trend continues, it could have implications for rental supply in the years ahead, particularly at a time when demand for housing remains elevated across much of the UK.
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