In a surprising development for the private rented sector, the number of landlords selling former rental homes has declined sharply in the lead-up to the implementation of the Renters' Rights Act on 1 May 2026. Data from TwentyCi's Property & Homemover Q1 2026 report reveals that the share of homes listed for sale, which had been rented within the previous three years, plummeted from 22.5 percent in Q1 2025 to just 12.4 percent in the same quarter of 2026. This marks a significant 45 percent year-on-year decrease, prompting a reevaluation of landlord exit strategies as compliance costs and regulatory pressures intensify.

The reduced sell-off activity is particularly pronounced in London, where landlords have listed 51 percent fewer former rental homes compared to the previous year. Outside the capital, the decline stands at 41 percent. Inner London remains the most active market for exits, but even here, the pace of disposals has slowed considerably. This trend suggests that while some landlords are indeed stepping back, they are doing so at a more measured pace than anticipated.

Market Conditions and Rental Supply

Despite the slowdown in selling activity, the overall rental supply in the market remains constrained. TwentyCi's report indicates that regulatory changes, tax reforms, and rising operational costs have collectively diminished the available private rented stock. Concurrently, affordability issues, coupled with a tighter rental market, continue to pose significant challenges for prospective tenants.

According to the National Residential Landlords Association (NRLA), 24 percent of landlords expressed intentions to exit the market in response to the upcoming Renters' Rights Act. This legislation is expected to introduce further complexities in landlord-tenant relationships, causing many property owners to carefully consider their future in the sector. The latest figures indicate that while some landlords have postponed sales, they are not abandoning the idea entirely.

One concerning statistic from TwentyCi highlights that only 11 percent of former rental homes sold in London during Q2 and Q3 of 2025 returned to the lettings market by the end of Q1 2026. Outside London, the figure is even lower at just 6 percent, indicating that once properties leave the rental market, they are not being replaced in significant numbers. This trend raises alarms about the potential long-term impact on rental supply.

Landlords' Strategic Considerations

For many landlords, the current market landscape may resemble a strategic pause rather than a complete retreat. The prospect of new regulatory requirements associated with the Renters' Rights Act has led some property investors to adopt a wait-and-see approach before making disposal decisions. Others may be holding onto assets that continue to yield acceptable returns amid a challenging sales environment.

The interplay of market conditions means that many landlords are navigating a landscape of slower rent growth and tighter tax regulations. As a result, the decision to sell is not straightforward; it requires careful consideration of local pricing dynamics, financing options, and potential reinvestment strategies.

The implications of this slower sell-off rate are mixed. While it may alleviate immediate pressures on rental supply, landlords face the ongoing challenge of a thin replacement stock once properties exit the sector. Additionally, the looming compliance costs associated with new regulations could drive another wave of disposals later in the year, particularly as landlords seek to adapt to the evolving landscape.