Understanding the Landlord Sell-Off: What London Landlords Need to Know Now

The Landlord Sell-Off: What’s Happened Since 2017?

Savills recently highlighted a trend many London landlords have experienced: a steady decline in landlord instructions to let properties beginning in 2017. This sell-off reflects a combination of significant tax reforms, rising interest rates, and new regulations such as the Renters' Rights Act, which collectively have made buy-to-let less financially attractive.

Why This Matters to You

For landlords, especially in London’s competitive rental market, these shifts mean increased operational complexity and pressure on margins. The Renters' Rights Act introduces heightened tenant protections that, while beneficial for renters, increase compliance costs and administrative burdens for landlords. Meanwhile, tax changes (such as restrictions on mortgage interest relief) and rising borrowing costs squeeze profitability.

Savills forecasts rental growth to stabilise over the next five years, with rents expected to rise around 12%. However, this growth is tempered by risks such as further landlord exits or changing migration patterns driving supply-demand imbalances. Understanding these dynamics is critical to managing your portfolio effectively.

Practical Implications for Different Landlord Profiles

• Single-Unit Landlords: The cost and complexity of compliance may feel disproportionately high. Review your property’s financial viability carefully, factoring in increased compliance costs and potential rent growth limitations.

• HMO Landlords: Higher regulatory scrutiny means ensuring all aspects of your HMOs meet the Renters' Rights Act standards and local licensing requirements. Increased tenant protections may affect tenant turnover and management practices.

• Portfolio Landlords: For those with multiple properties, combined tax changes and regulatory compliance can significantly impact cash flow and profitability. Strategic portfolio reviews are essential to identify less profitable assets.

• Accidental Landlords: Those not primarily in the rental business should assess whether holding on is financially sensible given the evolving landscape.

Concrete Next Steps

1. Compliance Audit: Conduct a thorough review of your properties against the Renters' Rights Act and other recent regulations. This includes tenancy agreements, deposit protections, property standards, and tenant communication protocols.

2. Financial Assessment: Analyse your portfolio’s profitability under current tax and interest rate conditions. Use scenario modelling to understand the impact of possible future changes.

3. Market Monitoring: Keep track of local rental market trends and forecasts. Adjust rental pricing and marketing strategies accordingly to remain competitive without overpricing.

4. Professional Advice: Engage property accountants, letting agents, and legal advisers familiar with recent regulatory changes to optimise operations and mitigate risks.

5. Tenant Relations: Strengthen communication and service standards to retain good tenants amid a more tenant-favourable regulatory environment.

How Rentals & Sales Can Support You

Our team specialises in helping landlords navigate these challenges. We offer portfolio reviews focusing on profitability and compliance, bespoke compliance audits to ensure you meet all legal obligations, and pricing strategy consultations tailored to your local market. In uncertain times, proactive management is key — we’re here to support you every step of the way.

Compliance disclaimer: This article provides general information and does not constitute legal or financial advice. Landlords should consult qualified professionals to address specific circumstances and compliance requirements.