Why are private landlords quitting in 2025?

More and more landlords are looking to sell property in 2025. The NRLA’s recent landlord survey found that 41% of landlords have indicated they’re likely to sell some properties during the next year (compared to just 19% in 2023-24). 

And according to data by TwentyCi, in January this year, more than 25,000 homes were listed for sale that were previously rental homes, representing 17.4% of all new listings. A huge leap up from just 11.7% on average in 2024.

So if you are an existing landlord, and you are not sure if it is still worth staying in the market in 2025, you’re not alone.

Being a landlord right now is tough. But we do think it is still profitable and valuable. So we want to cover some of the biggest reasons that small landlords are quitting in 2025, and how you can insulate yourself against the challenges landlords are facing.

Why are landlords quitting in 2025?

1. Regulatory changes

If you’re a landlord, you’re aware of the seemingly endless new regulations that are coming into force in the UK that are affecting how you must manage your home.

The Conservative Government, when they were last in power, said that they wanted to change how tenants were treated under current regulations to give renters more rights and improve conditions in rented homes. That was going to be the Tenants Rent Reform Bill.

And when Labour came in, they tweaked the Bill and renamed it the Renters Rights Bill, with some key changes and policy proposals that are radically changing how you can manage your own rental property. That includes:

• Limiting your right to raise the rent of your property to no more than 10% per year, regardless of previous rent freezes;

• The end of section 21, preventing no-fault evictions without properly addressing existing problems with at-fault evictions;

• Abolishing landlords’ ability to restrict pets, extended family members or benefit recipients from moving in without permission.

The reality is, a small number of bad landlords have led to these changes coming in that lead to the Government feeling these reforms are necessary. But in practice, it means it is less and less appealing for potential or existing landlords to continue to rent out their own homes. 

The potential ceiling on rent rises coming in, has meant many landlords have put their rent up now and by a significant sum, to avoid being caught out when new policies come in. And the end of section 21 has caused a small panic, as the court system is already backed up with contested at-fault evictions sometimes taking months to ever be heard by a court.

Big regulatory changes mean it’s harder than ever to be a small private landlord, because it’s harder than ever to keep on top of what you must do to remain legal and compliant. So it’s no surprise that in 2025, 34.3% of landlords reported regulatory compliance as their biggest challenge to overcome.

How to address regulatory changes as a new small landlord

Thankfully, people and groups like the National Residential Landlord’s Association (NRLA) have made easy packs and advice that you can follow to make sure you are compliant with both existing and upcoming regulations. If you are not a member, find out how to join the NRLA for their support.

You can also keep on top of landlord regulatory changes by using August Intelligence, part of our landlord app built for small landlords. August Intelligence is a smart assistant designed to make property management effortless – you can get quick answers to important questions like landlord obligations or regulations by asking it questions like “How do I get an EPC for my rental property” or “Explain the Renters Right Bill”, and get help straight away.

Our app is designed to be the app for small landlords – so if you need assistance, download now to start asking questions and getting help for free.

2. Rising costs 

For almost a decade, the Bank of England interest was as low as half a percent. That meant that mortgages were typically between 1.5% and 2.5%. So for many landlords, renting out was a fantastic financial opportunity where borrowing costs were low, house prices were appreciated significantly in value, and renters brought in a steady stream of income.

But from early 2022, rates have skyrocketed. The average 3-year fixed rate went from around 2% in January to as high as 5.98% by November 2022. And some landlords were forced to pay even more – up to seven or even eight percent, possibly quadrupling costs in a matter of years.

That meant many landlords saw the rent coming in become less than the mortgage payments going out. And that’s not to mention rising bill costs for residential landlords offering ‘all bills included’ properties, rising costs for property repair, and the introduction of section 24 increasing landlords’ tax burdens.

As most landlords on shorter fixed term mortgages have been shifted onto more expensive repayment plans, rising costs has become an unavoidable challenge. And now, 18.5% of landlords report rising costs as a top concern – and many are selling to diversify their portfolio.

How to address rising costs as a small landlord

Unfortunately, until interest rates come back down and the economy returns fully to pre-pandemic levels, higher costs are likely to stay. 

If you have mortgages against your rental properties, can you swap to a longer fixed rate mortgage? Banks are especially open right now to consistent locked-in income, so 2025 might be your best year to lock in a lower rate fixed mortgage if you have not negotiated payments recently.

But ultimately, raising rent, particularly before the new Renters Right Bill reforms come in, might be something you have to do to keep costs under control. Higher mortgage rates and the cost of living affects everyone, and while during Covid many landlords offered below market rates or frozen rent rises to keep tenants in properties, rents right now are at or near record rates in every region of the United Kingdom. Passing on some of your costs at this point in time will likely be easier to do now, than trying to do so in the future. 

3. Tax changes

In April 2017, Section 24 of the Finance Act was first introduced. It meant if you own property in your own name, if you have a mortgage, and you are a higher rate taxpayer, then you cannot offset your mortgage interest to reduce your tax (and therefore have to pay a lot more tax on your rental income).

Section 24 was phased in over four years, and most landlords only were impacted by it in 2021. A year later, as costs spiked, it meant small landlords were hit with a double whammy – your costs would be going up, but you were still making money ‘on paper’, so your tax bill went up too. 

These tax changes heavily penalised small landlords who weren’t set up as a limited business, but just managing a few smaller properties. And many landlords, after Covid, thought the same thing – house prices are high, my tax bill will go up anyway, so let’s sell up now and quit being a private landlord to diversify their income to reduce my costs.

How to reduce your Section 24 tax burden as a small landlord

The easiest way to reduce your Section 24 tax burden is to transfer your rental properties to a limited liability company. While incorporation comes with some ongoing costs, as well as Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT) implications, it’s often significantly cheaper than paying the extra tax from Section 24.

You can also consider gifting your property to a partner or spouse. If they are in a lower tax band, the costs incurred from Section 24 can drop significantly. 

Ultimately, ‘Removing’ the income from your reported earnings this way can keep you in a lower tax bracket, benefiting you further. But so long as the Chancellor or Prime Minister sees landlords as ‘not working people’ and a source of extra tax receipts, then private landlords will be more likely to quit.

4. Energy efficiency requirements

For years, landlords have been required to meet minimum energy efficiency standards (MEES) to legally rent out their properties. Previously, rental homes needed an Energy Performance Certificate (EPC) rating of at least ‘E’, a reasonably attainable standard.

However, landlords in England and Wales have been told they must ensure rental properties have a minimum EPC rating of ‘C’ or above for new tenancies, with a target of ‘C’ or above for all tenancies by 2030. Given that only around 60% of homes meet the ‘C’ standard, this is a significant number of rental properties that will need upgrading to meet the new targets.

The original ambitious target of homes reaching ‘C’ keeps getting pushed back – originally, rentals needed to reach ‘C’ by 2025. Then, the target was 2028. Now, the target is 2030. However, the constant changing targets have left everyone more confused than ever, and the burden of improving a home to a ‘C’ standard has led many landlords to quit, and abandon upgrading properties to the higher standard at all. 

How to deal with higher energy efficiency requirements as a small landlord

Upgrading your rental property to be more energy efficient can feel like an added burden, but in many cases, the costs are manageable—and the long-term benefits can make it worthwhile.

An EPC certificate itself costs under £100, but making the necessary improvements to boost your rating can be significantly more expensive. To help, the government has set a cost cap of £3,500 (including VAT), meaning landlords will never be required to spend more than this amount on energy efficiency upgrades.

If your property is still below the minimum ‘E’ rating after spending up to the cap, you can apply for an ‘all improvements made’ exemption, allowing you to continue renting without further mandatory upgrades.

Many landlords are already proactively improving energy efficiency to stay ahead of regulations and attract tenants looking for lower energy costs. In fact, 58.3% of landlords have already made eco-friendly upgrades, while 24.9% plan to do so within the next five years. With an increasing focus on sustainability, 28.6% of landlords are specifically aiming to meet EPC Level C, ensuring compliance with future regulations while making their properties more attractive to renters.

Is it still worth it being a landlord in 2025?

With increasing regulations, reduced tax benefits, and rising mortgage costs, being a private landlord in 2025 is undoubtedly more challenging than it was a few years ago. However, despite these obstacles, landlords who stay informed and adapt to the changes can still find property investment to be highly rewarding, profitable, and a strong way to diversify income.

One of the biggest advantages of remaining in the market is that rental income is at record highs. As more landlords choose to sell up, competition decreases, giving those who stay greater pricing power and stronger tenant demand. For landlords who have already factored in higher costs, this could mean better returns than ever before.

The real challenge in 2025 isn’t just financial—it’s the lack of clarity from the government on upcoming regulations. Policy changes, such as the Renters’ Rights Bill and evolving energy efficiency requirements, mean landlords must stay proactive to avoid unexpected costs or compliance issues. But for those who keep up with legislative changes and plan accordingly, being a landlord remains a viable and lucrative investment.

Staying informed doesn’t have to be difficult. A landlord app like August can help landlords navigate the complexities of property management by providing quick answers to regulatory questions, tax considerations, and best practices. 

Download August for free to see how it can help you manage your rentals more efficiently and confidently in 2025.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.