New research from specialist lender Together indicates that recent regulatory changes and increased tax burdens are contributing to a notable shift within the UK’s buy-to-let (BTL) sector. The data suggests a growing number of landlords are either reducing their property holdings or leaving the market altogether.

According to the research, 12% of BTL landlords plan to sell one or more properties in 2024, and 11% intend to exit the sector entirely. An additional 8% have chosen to pause further investment over the next 12 months due to a perceived lack of opportunity.

Despite this, market activity remains relatively strong. Figures from UK Finance show that the number of BTL mortgage completions in Q4 2024 rose by 39% year-on-year. The total lending value also increased by 47%, indicating that while some landlords are exiting, others are continuing to invest.

The research explored the reasons behind landlords’ decisions to leave. Of those planning to exit, 14% cited capital gains tax (CGT) as a contributing factor. Another 12% pointed to higher interest rates, and 8% referred to the impact of the Renters Reform Bill.

At the same time, 29% of landlords surveyed reported plans to expand or diversify their portfolios. This suggests that ongoing market activity is increasingly driven by landlords with the resources to manage higher costs and adapt to regulatory requirements.

The findings also highlight several challenges for those remaining in the sector. Seventeen percent of landlords identified increased building material costs as a concern. Sixteen percent pointed to competition from overseas investors and the potential for further policy changes under a Labour government. Stamp duty increases and enhanced safety standards were each mentioned by 15% of respondents.

Ryan Etchells, Chief Commercial Officer at Together, acknowledged the impact of current market conditions but noted the continued resilience of the sector: “BTL is a robust market and while the impact of cost pressures and wider regulatory changes is apparent, we are still seeing a healthy proportion of landlords riding out the wave and expanding their portfolios.

“There will likely be some smaller or amateur landlords who decide to sell off investments or exit completely, but in their position we are already seeing larger, professional landlords stepping in to seize diversified opportunities.

“Until the final outcome of the Renters Reform Bill is known, there may be a bit more volatility as landlords assess the cost impact to them and their property plans this year.

“But, on the whole it’s a changing of the guard rather than a mass exodus.”

Etchells added: “A combination of more flexible BTL regulations and an agile lending sector can help landlords to manage their portfolios and ensure they are able to leverage all available opportunities – something the specialist sector is in a prime position to do.”

While some landlords are exiting due to rising costs and regulatory pressures, the data indicates that the market is not contracting overall. Rather, it is undergoing a structural shift, with increased activity from larger and more established investors.