Landlord Exodus Deepens as RICS Data Signals Rental Supply Crunch

The latest RICS Residential Market Survey paints a picture of a market losing momentum, with the headline house price balance slipping further into negative territory and, more strikingly, a continued withdrawal of landlords from the private rented sector. Surveyors reported that new landlord instructions fell for the ninth consecutive month, even as tenant demand rose at one of the fastest paces recorded this year. This divergence — shrinking supply against rising demand — is not a passing anomaly. It is the clearest evidence yet that the buy-to-let sector is undergoing a structural contraction that will reshape the UK rental market well into 2025 and beyond.

For professional investors and landlords, the significance of this data extends far beyond a single survey print. The RICS figures corroborate what English Housing Survey and HMRC data have already begun to show: a net loss of landlords from the market since 2022, driven by a combination of higher mortgage costs, the phased removal of mortgage interest relief, tightened EPC requirements, and the additional 3% stamp duty surcharge on second homes. With average buy-to-let mortgage rates still sitting around 5.5%–6%, well above the sub-2% deals landlords enjoyed before 2022, many highly-leveraged portfolio landlords are finding the sums simply no longer work, particularly in lower-yielding southern markets such as Surrey and parts of outer London, where gross yields can languish below 4%.

The regional picture is far from uniform, and this is where the real story for investors lies. In Manchester and Leeds, where rental yields of 6–7% remain achievable and tenant demand is buoyed by strong graduate retention and inward migration, landlord exits are being partially offset by institutional build-to-rent investment stepping into the gap. Liverpool continues to attract yield-focused investors priced out of the South East, with average rents rising by close to 8% year-on-year according to recent Zoopla data. Birmingham, benefiting from HS2-adjacent regeneration and a persistent housing supply deficit, is seeing similarly resilient rental growth despite the broader landlord retreat. Newcastle, by contrast, remains more exposed to affordability constraints among tenants, meaning rental growth there is likely to plateau even as stock tightens.

London presents the most acute imbalance. RICS respondents in the capital reported the steepest fall in landlord instructions of any region, compounded by selective licensing costs and stricter enforcement of decent homes standards. With institutional build-to-rent delivery concentrated in a handful of London boroughs and Manchester, it cannot come close to replacing the volume of stock exiting individual landlord ownership. Rightmove's most recent rental tracker put London asking rents up 6.7% year-on-year, and this survey suggests that figure has further to climb before any stabilisation.

Looking ahead six to twelve months, the direction of travel is reasonably clear. Barring a meaningful cut to Bank of England base rates — currently at 4.75% — buy-to-let mortgage pricing is unlikely to fall enough to draw significant numbers of landlords back into the market. The Renters' Rights Bill, expected to receive Royal Assent in the coming months, will add further compliance costs and reduce flexibility around possession, which several surveyors specifically cited as a factor accelerating landlord sales. First-time buyers may find modest opportunity in this dynamic, as some ex-rental stock is sold into owner-occupation, particularly in the £200,000–£350,000 bracket common across the North West and Midlands. But for tenants, especially in London, Manchester and Bristol, the realistic outlook is continued rental inflation running well ahead of wage growth through 2025.

For commercial and institutional investors, this is precisely the environment in which build-to-rent and purpose-built student accommodation platforms can expand market share at the expense of retreating private landlords, and capital continues to flow into these sectors despite broader housing market softness. Developers with permitted development rights or brownfield sites suitable for multifamily schemes in Birmingham, Leeds and Manchester are best positioned to capture demand that individual landlords can no longer economically serve. The RICS survey, read in full, is less a signal of a housing market in decline than one bifurcating sharply between an amateur landlord class in retreat and an institutional rental sector scaling up to fill the vacuum — a transition that will define UK rental economics for the remainder of this decade.