A new analysis from Property118 indicates that landlords are increasingly making a deliberate choice to exit the private rental sector, rather than being compelled by financial hardship. The findings, based on a comparison of two quarterly sentiment surveys conducted in Q1 and Q2 2026, suggest a hardening mood among property owners which could have significant implications for the availability of rental homes across the UK.
The Property118 Landlord Sentiment Survey, which gathered responses from over 2,000 landlords, found remarkable stability in the fundamental structure of the sector. The majority of landlords continue to hold properties in their personal names, and gearing levels remain conservative, with nearly three in ten landlords owning their properties outright and around four in ten either mortgage-free or with a loan-to-value ratio below 30%. Only approximately 9% have gearing above 70%. This financial resilience, according to the report, explains why a widely anticipated wave of forced sales has not materialised.
Despite this underlying financial strength, the mood among landlords has shifted. Between the first and second quarters of 2026, there was a noticeable increase in pessimism regarding property values and a strengthened intention among landlords to sell properties or exit the sector entirely. A key factor cited as potentially reversing this trend is the unaddressed issue of Section 24 tax changes, which limit mortgage interest relief for individual landlords.
The distinction between financial distress and a considered decision to leave is central to the survey's conclusions. The report argues that a sector facing temporary difficulties typically waits for confidence to return, whereas one making a considered judgement acts decisively. The consistent data over two quarters, representing tens of thousands of tenancies, signals a contraction in the supply of privately rented homes by choice, rather than necessity.
Critics of current government policy often point to evidence suggesting a shrinking private rented sector. The Property118 report highlights that this trend, if it continues, will place further pressure on an already strained housing market. Social housing waiting lists are at record levels, and new housebuilding targets consistently fall short, meaning a reduction in private rental stock could leave more people struggling to find suitable accommodation.
The Property118 survey plans to continue tracking landlord sentiment quarterly, aiming to provide ongoing data on the direction of the private rented sector. The findings present a clear challenge to policymakers, suggesting that without meaningful reform or a pause in the pace of legislative changes affecting landlords, the supply of privately rented homes is likely to continue contracting.