A run of regulatory and legislative changes has made life tougher for landlords. Even so, opportunities remain for people prepared to stay in the market.
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Landlords are selling up in large numbers as several pressures bear down on the buy-to-let (BTL) market.
Property data company TwentyCi estimates that landlords sold around 44,000 BTL homes across the UK between the start of July and mid-September.
An average of 562 homes exited the sector each day - the highest rate recorded since 2016, according to the analysis.
The report attributed the market's gloom to higher costs, government policy and growing administrative demands.
Chris Norris, the NRLA's chief policy officer, said successive governments had treated landlords as though they could keep absorbing rising costs and taking losses without leaving the market.
The result, he said, was clear: fewer rented homes are available, leaving tenants with less choice across the private rented sector.
Professional landlords can still find openings in the BTL market, especially if they are prepared to manage things themselves.
Why are so many landlords leaving the market?
For years, buy-to-let offered landlords both rising property values and rental income that often beat savings accounts, while the Bank of England base rate remained below 1% from 2009 to 2022.
But a string of legislative changes over the past decade has made life harder for landlords.
Starting in April 2017, Section 24 of the Finance Act 2015 began phasing out the mortgage-interest tax relief available to individual BTL landlords. The impact became much harder to absorb when mortgage rates rose in 2022.
Before the changes, landlords were able to deduct all of their mortgage interest from rental income before tax.
Between 2017 and 2020, landlords lost the mortgage-interest tax relief in stages. They now receive a 20% tax credit on those payments, which has increased their tax bills.
Suzanne Smith, a former solicitor who became a landlord and wrote *The Good Landlord Handbook*, said: "When mortgage rates were only 2%, landlords could manage even without deducting all their financing costs from rental income."
"When rates rose and landlords began paying 5% or 6%, the effect became much more noticeable."
More recently, the Renters Rights Act has added to the burden. Large parts of it came into force in May, making the practical work of being a landlord in England considerably harder.
This would make it more difficult for landlords to evict tenants after section 21, or "no-fault" evictions, is abolished.
Landlords would also have to accept a tenant's request to keep a pet, and could ask for no more than one month's rent upfront.
From April 2027, rental income from property in England, Wales and Northern Ireland will face higher tax rates: 22% for the basic rate, 42% for the higher rate and 47% for the additional rate. The current income tax rates still apply.
David Fell, lead analyst at estate agent Hamptons, said landlords might tolerate any one of these issues, but together they make turning a profit far more difficult than it was two years ago.
Are there still opportunities for landlords?
Despite the difficulties, landlords can still find opportunities in the BTL market.
Smith owns four rental properties and aims to let them to families for the long term. That approach helps reduce the risk of gaps between tenancies, when no rent is coming in.
She added that longer tenancies give her time to develop trust with renters.
Before agreeing to a let, she checks that applicants can afford the rent. She also keeps the properties in good repair and makes sure each one has an EPC rating of at least C.
"People still need somewhere to live, yet many cannot afford to buy and social housing remains in short supply," Smith said.
"That's what makes this asset resilient: steady demand from tenants. If you offer a good service, meet that need and follow the rules, you'll be fine."
Other landlords appear to be taking a similarly hands-on approach. A poll by BTL lender Rely Mortgages found that 55% are giving more thought to the tenant experience, and 59% have spoken directly with tenants about what they need.
Landlords may also be finding better prospects elsewhere in the housing market.
Research from The Cumberland Building Society showed that 88% of mortgage brokers had received more enquiries about holiday-let mortgages during the previous 12 months.
A holiday let offers short stays, unlike a BTL, which is rented out for longer periods.
You can earn rental income from holidaymakers, make a profit if you sell the property later, and stay there yourself when you take a holiday.
But the extra income comes with added costs. Holiday lets usually require a larger deposit than BTL properties, and you may also need to pay for cleaning between guests.
Is it still worth being a landlord?
If you judge BTLs solely by their financial returns, other investments may offer better gains.
Wealth manager Quilter compared the potential returns from buy-to-let property and the stock market over the past 20 years.
Research indicates that a rental property purchased for 154,927 in June 2006 would generate a net profit of 191,619 over 20 years. By June 2026, that figure would include 83,170 in capital gains after tax and costs, along with 108,448 from house price growth and net rental income.
Over that same 20-year period, a 154,927 investment in UK equities made in June 2006 would now be worth 592,130, according to Quilter - a gain of 437,203.
Investing the same amount in global equities would have produced 1,200,219, for a capital gain of 1,045,292. Neither figure accounts for fees or tax.
Investments can lose money, and no return is guaranteed.
Landlords also face the financial costs and administrative work that come with owning property in the current market.
Against that backdrop, Smith said landlords can no longer treat BTL as passive income.
"If you think rental income is passive, try selling the property when the tenants move out," she said. "I recently had one sit empty for six months while I replaced the kitchen and carried out other work. Being a landlord involves far more risk than leaving your money in the bank."
She added: "The people who succeed will be the ones who run it like a business: keeping accurate records, handling repairs properly, working with an accountant, and giving tenants good service."
What major changes do landlords need to deal with in the current market?
Renters Rights Act
The Renters Rights Act gives local authorities the power to fine landlords who breach its requirements, while also creating more paperwork for landlords.
Good record-keeping can make the change easier to manage and help landlords comply with the new rules.
Kim Lidbury, group director at the estate agents' trade body Propertymark, said accurate records were "particularly important" under the legislation. Property management software may help landlords keep them in order.
New EPC ratings from 2030
From 2030, the Minimum Energy Efficiency Standard (MEES) will require landlords to ensure that rental properties have an EPC rating of C or higher.
A new assessment framework will also apply. Rather than relying on a single measure, it will consider several metrics when deciding whether a property meets the C rating. The framework is due to roll out from the second half of 2027.
As the framework changes, getting ahead now could help ensure your property reaches a C rating under the current rules.
Making Tax Digital
HMRC is introducing Making Tax Digital (MTD) for income tax in stages. Landlords with annual rental income above 50,000 must now use the new system.
Landlords with annual turnover of 30,000 or more must begin using the system in April 2027. The requirement will extend to those earning at least 20,000 a year from April 2028.
Lidbury said: "Anyone affected by Making Tax Digital should make sure they have suitable digital systems in place to keep accurate financial records."
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