Landlords Hesitate to Sell Amidst New Renters' Rights Act and Challenging Market

The number of landlords listing properties for sale has decreased as a new renters' rights act introduces a significant risk for those unable to find a buyer. Analysis by Hamptons indicates that failing to sell a property after initiating the process under the new regulations could result in a 12-month ban on re-letting, leaving landlords with an empty, unusable asset.

Nationally, only 9.2% of homes put up for sale in June had been advertised for rent within the preceding five years. This figure is down from 11.3% a year ago and has declined since earlier in 2026, prior to the Renters' Rights Act taking full effect on May 1. In London, the proportion of previously rented homes listed for sale dropped to 20.3% in June, also showing a downward trend.

The Renters' Rights Act mandates a 12-month ban on re-letting properties for landlords who use the Ground 1A notice to sell, a new formal process to regain possession for the purpose of sale. This means that if a sale falls through, the property cannot be re-let for a full year, a considerably higher cost in the current market climate.

Selling a property has become increasingly challenging. According to property listing site Zoopla, three in five homes listed for sale since January have yet to be sold. Hamptons reports that the average time to sell a property is at its highest level since 2011. Last year, 51% of properties listed by landlords failed to sell, a figure that rose to 60% for flats. Had the new re-letting ban been in place then, an estimated 80,000 to 100,000 unsold rental homes would have been barred from returning to the market for a year, potentially reducing rental availability.

"A tougher sales market and the introduction of a 12-month re-letting ban mean selling has become a more complicated proposition for landlords," said Aneisha Beveridge, head of research at Hamptons. "For many, the prospect of being left with an empty property that can't easily return to the rental market has made holding on to an investment look more attractive."

Beveridge anticipates that this cautious approach may prove beneficial. "Yields have improved over the last couple of years as rents have risen faster than house prices, giving investors more headroom to absorb higher borrowing costs," she stated. "At the same time, rental growth is picking up again, with rents on newly let homes rising at their fastest pace in more than a year."

Across the entire rental market, rents increased by 2.2% year-on-year. The average rent for a newly let home reached £1,392 per month in June. Rents on newly let homes are rising at their fastest pace in over a year.

The flats market, which has historically been popular with buy-to-let investors due to lower costs and generally better yields, is now disproportionately affected by landlords looking to sell. In June, 24.4% of flats marketed for sale had been previously rented, compared to just 7.8% of houses. Both investors and owner-occupiers have shown caution towards flats, partly due to rising service charges, which can range from £1,525 annually for the cheapest 10% of buildings to £8,680 for the top 10%. In June, the average flat took nearly a month longer to sell than a house, with flats going under offer after 85 days compared to 59 days for houses.

While many landlords have exited the market due to tax changes initiated in 2016 and increased mortgage costs since 2022, the overall number of rental homes has remained stable over the past decade. This is attributed to new landlords entering the market and accidental landlords retaining properties they previously occupied. The private rented sector has not grown at the same rate as the overall housing market; the number of rental homes in England has stayed at approximately 4.8 million over the last ten years, while the total number of homes has increased by about 2 million, with most of this growth absorbed into owner occupation. "While the new rules may have encouraged some landlords to sell, the bigger shift has come from years of tax changes and higher mortgage costs, which have gradually reduced the number of landlords in the market," Beveridge added.

Recent inflation, influenced by geopolitical events, has reversed expectations of interest rate cuts by the Bank of England, leading to higher mortgage rates for new buyers and those remortgaging.