Landlords have been leaving the London rental market since the Renters’ Rights Act was first announced and contributing to a tightening in available supply.
Analysis from Investec Bank plc shows that in Q1 2025, almost half of homes listed for sale in London had previously been rental properties, up from just under a third a year earlier.
The data suggests many of these properties are not returning to the rental sector, with only around one in ten homes purchased in mid-2025 subsequently re-let.
This trend points to a reduction in underlying rental stock, even as listing activity remains elevated.
MORE CHURN
Rental listings in London reached more than 113,000 in Q1 2026, up on both 2024 and 2025 levels, indicating increased churn as properties cycle through the market.
Despite tightening supply, rents have remained broadly stable, with median monthly rents holding close to £2,200 over the past two years.
The findings suggest affordability constraints may be limiting further rental growth, even as demand continues to outstrip supply.
The shift in landlord behaviour follows the introduction of the Renters’ Rights Act 2025, which has increased regulatory requirements and reduced flexibility for property owners.
The report indicates that smaller or part-time landlords are more likely to exit, while larger, well-capitalised investors are expanding portfolios to take advantage of reduced competition.
STOCK LEVELS FALLING
Mandeep Dhillon (main picture, inset), Private Banker at Investec Bank, says: “Stock levels are falling as many properties sold are not returning to the rental market, which should support demand for landlords who remain invested.
“We are seeing well-capitalised landlords acquire additional units as some part-time landlords exit, with larger portfolios helping to manage income risk and regulatory demands.”
