More than two in five landlords are considering reducing their property portfolios despite rising rental yields and sustained tenant demand, according to research published by Aldermore.
The lender’s survey found that 42% of landlords may reduce the number of properties they own, while 45% reported that current market conditions are preventing portfolio expansion.
Rising yields fail to offset regulatory concerns
The findings emerge despite 47% of landlords reporting increased rental yields over the past year. Among those recording growth, average yields rose by 7.2%, with 18% reporting increases of 10% or more.
The primary drivers for potential portfolio reductions include increased regulation, with 43% citing the Renters’ Rights Act as a concern. Tax changes were identified by 39% of respondents, while 37% pointed to rising maintenance costs.
More than half of landlords surveyed—55%—indicated that further increases in taxes on dividends, property and savings could force them to exit the market entirely. Additionally, 30% expressed that landlords are being unfairly blamed for broader housing system challenges.
Market implications
The survey results highlight a potential supply constraint in the private rental sector at a time when buyer demand remains subdued and pricing pressures continue across the UK property market.
Jon Cooper, Director of Mortgages at Aldermore, noted the disconnect between market fundamentals and landlord sentiment. “Demand from tenants remains strong, and landlords are seeing improved yields, but increasing regulation, tax changes, and rising costs mean many are hesitant to invest further,” he said.
Cooper added that landlord confidence is essential for the overall health of the private rental sector, particularly for maintaining accommodation standards and encouraging portfolio investment.
The survey findings suggest that despite favourable rental market conditions, regulatory and fiscal pressures are reshaping landlord investment decisions across the sector.
