£79 Billion Wiped from the UK Rental Market – But There’s More to the Story than Headlines Suggest

You may have seen one or two alarming headlines this week. "Private rented sector shrinks by £79 billion since 2022." "Buy-to-let exodus wipes £48bn from rentals."

To mention a few.

If you're a landlord, it's the kind of thing that can make you set down your coffee and stare absently into the middle distance whilst thoughts of impending economic catastrophe whirl around inside your head...

We get it. Those numbers do sound catastrophic.

But before you call your estate agent, let's actually look at what Savills' analysis – the source behind the £79bn figure – is really telling us. Because there's a difference between a market that's contracting and a market that's collapsing.

Here in South London, right now, the difference matters enormously.

What Do the Numbers Actually Say?

Savills puts the total value of England's privately rented homes at £1,556 billion in 2022, falling to £1,477 billion by late 2025, a net drop of 5.1% over three years. And that might be a little alarming, when you consider that the bricks-and-mortar value of properties, generally speaking, has increased in that time. In other words, the shrinkage isn't about falling prices. It's very much about fewer rental properties overall.

But as is so often the case, there is a bit of nuance to consider.

Here's what seems to be happening: traditional smaller landlords – the classic “individual” landlord with one to four properties alongside a full-time career – are selling up to owner-occupiers faster than new buy-to-lets are coming online.

Truthfully? We can all see reasons why. CGT jumping to 24% for residential property (up from 18%), frozen thresholds, plus the administrative weight of the Renters' Rights Act have tipped the scales for plenty of landlords who were already on the fence.

We hear it directly from our own clients. Higher taxes and higher costs to maintain properties, EPC requirements tightening, legislation changes that loom large. There are definitely added costs that weren't on the spreadsheet just two or three years ago. The arithmetic has changed, and it is true that some landlords are deciding it simply no longer adds up.

Why Landlords Selling Up Matters (For Everyone)

A smaller private rented sector means tighter supply, and that creates upward pressure on rents for the very tenants that recent changes are intended to help.

Rents rose 8.5% nationally last year, and here in Lambeth this rise was not dissimilar, with rent prices increasing by 7.9% according to data from the Office for National Statistics (ONS). Tenants have fewer options; landlords face more scrutiny. None of this happens in a vacuum.

But the headlines are missing some key information that really matters in order to paint the full picture.

Because it's not all doom and gloom. Not even close.

Whilst there has been an undeniable shrinkage in the PRS, at the same time, corporate landlords and institutions have been actively buying up portfolios from many exiting small landlords, cushioning the net loss.

Other landlords – maybe the larger-type of smaller-landlord, for want of an easier way to describe them, those with slightly larger portfolios – have moved their properties into a corporate structure (note – it doesn’t suit everyone, and before you rush to do this, it is key to talk to a professional advisor about what it entails!).

Overseas investors have put roughly £40 billion into UK build-to-rent over the past decade, with around £30 billion going into professionally managed blocks, much of it post-2022 (as revealed by Knight Frank in a separate news article this week). It's not your traditional mum-and-dad buy-to-let model, and the timelines being discussed by Knight Frank’s analysts compared to Savills do differ. That said, it does clearly help to stabilise supply in some high-demand areas.

At the same time, the buy-to-let sales market isn’t dead at all. There is a new profile of landlords quietly but actively getting on with it. Millennials and Gen Z investors are stepping into the breach, often via limited companies from the very start in order to sidestep the personal CGT and income tax issues that are encouraging older landlords out.

These are tax-savvy, tech-enabled landlord buyers, laser-focused on yield but also professionalised in their approach. In many ways, they're exactly the profile built for the current regulatory environment. (We've written about this before, see here: https://yourhomemanaged.com/articles/millennial-and-gen-z-the-next-generation-of-landlords)

The South London Picture

The £79bn figure is a UK-wide average, and averages are notoriously good at hiding what's actually happening on the ground.

In South London, when it comes to rental stock, demand is consistently outstripping supply. Rents are up 8% year-on-year, and that rolling 12 month figure has been 10%-12% up on a 12 month basis in very recent history.

Yields are beating savings rates – just about. Nevertheless, when it comes to investing in London, it is often less about the yield and more about the capital value. Institutional money is targeting managed blocks here, while quality single lets, like many of the homes we look after, continue to hold firm and attract strong demands from tenants locally.

If you own well-maintained property in South London and you're managing it properly, this still feels like a hold market, not a sell market – and anecdotally speaking, very few of the landlords whose properties we let and manage have opted to sell at this stage when rents are so strong.

The Bottom Line

It is certainly a time to be mindful – but there is no need to panic. Now is a smart time to review your tax position, review your capital value and yield achieved, and even to do some general housekeeping ahead of legislation changes, such as checking your EPC rating is up to what the new standards will require in 2030 (if it comes to pass), and make sure your compliance is watertight as the Renters’ Rights Act implementation begins to roll in from 1 May 2026.

The Private Rented Sector is certainly not vanishing. But in many ways, it may be professionalising – and the loss of value from the PRS might actually be more representative of the move to professional corporate letting structures than it is a sign of a black hole swallowing the market and leaving would-be tenants stranded.

The landlords who are thriving right now are the ones working with experienced, dedicated agents, staying ahead of regulation, and making decisions based on data rather than headlines.

Whether you're weighing up whether to hold, sell tax-efficiently, explore a limited company structure, or simply wondering whether it is time to place your property in the hands of a professional agent if you have been self-letting and self-managing thus far, we're here to help you model all scenarios properly – not to guess at them.

Fancy a conversation about your portfolio? Get in touch with us here at Your Home Managed today.