Rental sector loses £79bn in three years amid tax hikes and red tape

The rental sector is the only area of the housing market to have lost value since 2022, as landlords are under pressure from mounting costs

David Byers, Deputy Property Editor

Monday March 09 2026, 12.00pm GMT, The Times

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The UK’s rental sector is contracting rapidly and has lost £79 billion — 5.1 per cent — in value in the past three years as landlords sell up amid rising taxes, more expensive mortgages and looming new renters’ rights.

Research carried out for The Times by the estate agency Savills shows that the private rental sector is the only area of the housing market to have lost value since the start of 2022, while the overall value of the UK’s housing stock increased by £336 billion, or 3.8 per cent, over this period.

The data is the latest indication that landlords are giving up, amid growing tax and policy changes. It comes days after separate data, produced by the estate agency Hamptons based on Companies House records, showed that 66,587 landlords put their homes in limited company structures in 2025, as they sought to flee from government tax grabs — the largest number ever.

Hamptons data also shows the diminishing appetite among buy-to-let investors for buying new properties. Last year 10.9 per cent of homes were bought by landlords, down from 15.8 per cent in 2015. The fall is most pronounced in London, where properties and mortgages tend to be most expensive and rental yields lowest. Here investment has dipped from 16.4 per cent to 9.1 per cent.

Lucian Cook, the director of residential research at Savills, says the data suggests we’re reaching a landmark moment of contraction in the buy-to-let boom, which began with a wave of cheap mortgages from 1996 onwards, reaching its peak in the early Noughties. The sector is increasingly becoming the preserve of professional investors with larger portfolios operated through company structures, rather than amateur or accidental landlords.

“Changes in tenancy legislation, higher operating costs and increased mortgage rates have prompted many private landlords to reassess their portfolios,” Cook says. “Larger landlords, better equipped to absorb added costs and requirements, have taken on some of this stock, contributing to a more professionalised private rental sector. But others have been sold to owner-occupiers, reducing the sector’s overall size.”

Buy-to-let mortgages became available for the first time in 1996. By 2000 73,200 had been issued, but between 2000 and 2007 there was a frenzy of investment, with landlords taking out a million more loans, worth £94 billion, which transformed the shape of the housing market.

The buy-to-let drive reached its peak in 2003, when annual property price growth topped 26.5 per cent. Grand Designs aired for the first time in 1999, Location, Location, Location in 2000 and Escape to the Country in 2002, as investors’ imaginations grew. We all had the property bug.

The growing pressure on landlords

Times have changed, however, and landlords now complain that a succession of tax rises has reduced their appetite to buy property and forced those who are purchasing homes to do so in cheaper areas. In 2016 George Osborne, who was then the chancellor, raised stamp duty by three percentage points for second-home and buy-to-let buyers and eroded the tax relief that ordinary landlords outside company structures could claim on mortgage interest.

Landlords have also endured a sharp rise in mortgage rates since autumn 2022, higher stamp duty — the surcharge is now 5 per cent — and some have been incensed by the government’s strengthening of renters’ rights, which comes into force in May and will make tenancy contracts rolling and ban “no-fault” evictions, with potential fines of up to £40,000. In her last budget, chancellor Rachel Reeves also introduced a two percentage point rise in property-earned income tax.

• Buy-to-let landlords go corporate in record numbers

As well as selling off properties, landlords are trying to protect their portfolios from rising taxes by putting them behind company structures. Incorporated landlords can deduct mortgage interest from their rental income when working out their taxable profits, giving them a smaller tax bill. All landlords used to be able to do this until April 2017, but the perk has been phased out. Now they are restricted to a 20 per cent tax credit — rising to 22 per cent from April 2027.

In addition, rental profits for incorporated landlords are subject to corporation tax rather than the property-earned income tax, which means they pay a rate of between 19 and 25 per cent, rather than the 40 or 45 per cent income tax paid by higher earners, which will rise to 42 and 47 per cent from April 2027.

Paragon Bank said limited companies accounted for 43 per cent of mortgaged buy-to-let house purchases during 2025, up from 35 per cent the year before.

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The company landlord dilemma

Putting your portfolio into a company structure is not something to be taken lightly, though, as there are tax, legal, accountancy and administrative costs that can outweigh the savings.

For example, someone transferring ownership of a rental property into a company usually has to pay stamp duty on the transfer because it is treated as a sale — and this includes a 5 per cent surcharge for additional properties. To make matters worse, multiple dwellings relief, which used to reduce stamp duty for bulk transfers like these, was abolished in June 2024.

Capital gains tax at a rate of 24 per cent (18 per cent if you are a basic-rate taxpayer) is also due when you make the transfer if the value is found to be higher than when you bought the property. However, this can be mitigated by claiming incorporation relief if you can prove that your portfolio is a business requiring 20 hours of work per week.

In addition, while there are plenty of mortgages available for landlords under limited companies, the interest rates tend to be between 0.4 and 1 percentage points higher than for individual landlords, so the homes will be more expensive to finance. Legal fees during the incorporation, and ongoing accountancy fees can also stretch to several hundred pounds.

Because of this, experts say it is really only an option for professional landlords with a large portfolio of properties. “It’s really not worth it,” says Samantha Collett, 50, who owns several dozen properties in London, the home counties and the West Midlands.

Samantha Collett has decided to sell some of her properties

“I have a property company as well as owning in my own name. The amount of paperwork that’s generated from just having a property company, having to do all the valuations, sending your company accounts … and my accountant is bringing in more and more charges. I don’t even know what the flipping charges are for. But there is a barrage of fees.

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