Why thousands of landlords are exiting this year

Hi there,

This is Chubby Wallet. The newsletter that teaches you how to profit from property trends before they go mainstream..

Here's what’s in store..

• General market update

• Why thousands of UK landlords are quitting

• North east auction sales dropping by 40% may signal opportunity

In Week 35, the UK housing market shows signs of activity picking up post-bank holiday, but stock remains high and sales are still behind.

This creates more room for buyer negotiation and investor opportunity…

The numbers

• New listings: 36,800 homes were put up for sale, 10.9% more than the 9-year average (skipping 2020’s weird data). This year, listings are just 3.3% higher than 2024 (Chris Watkin’s weekly report on Property Industry Eye).

• Total Homes Available: On September 1, there were 736,000 homes for sale, down 25,000 from August 1. Before COVID, it was around 660,000, and in hot seller markets, it’s under 600,000.

• Price drops: 25,700 homes had their prices cut. In August, 11.1% of homes were discounted, down from 14.1% in July. That’s 22% more than the 5-year average of 10.7%, with 90,000–95,000 cuts last month.

Sales progress

• Deals in Progress: 24,900 homes had contracts signed but aren’t finalized, with a 2025 average of 26,200. This is 6.3% more than last year and 13.7% more than 2017–2019.

• Finalized Sales: After some deals fell apart, 18,500 homes sold, up 5.3% from last year. The fall-through rate was 25.8%, a bit higher than the usual 24.2%.

• Cost Trends: Homes with signed contracts in August averaged £338.78 per square foot, up 1.41% from last August but down 2.2% from June. Prices might grow 1.5–2% this year when official records update (Chris Watkin’s report).

Economic picture

According to Propenomix, the economy shows little growth, and rising bond rates due to a weaker pound and doubts about rate cuts.

For investors buying rental properties, mortgage rates are around 5.7%, with no big drops expected soon.

• House Prices: August prices rose 0.3%, up 2.2% yearly to an average of £299,331. First-time buyer prices dropped 0.6% since May, helped by loans under 4%. North East and North West grew over 4%; South West fell 0.8%. Northern Ireland jumped 8.1% (Halifax House Price Index).

• Market Mood: New buyer interest dropped 17%, Cheaper homes sell better. Rental demand rose 5%, and might increase by 3% soon (RICS Residential Market Report).

• Economic Growth: July had 0% growth after June’s 0.4%. The last three months grew 0.2%, with a yearly rate of about 1.3%. Services grew 0.1%, but manufacturing dropped 0.9%. Construction rose 0.2%, though new projects are down 3.7% since 2023, while repairs jumped 17.7% (ONS GDP nowcast).

• Bond yields: Five-year bonds ended at 4.11%, up from 4.06%. Loan swaps are at 3.70%. The chance of a Bank of England rate cut in November is 20–40% (market data on gilts).

Final word

If you’re looking to earn steady income from rental properties, now’s probably a good time to buy value add deals..

With 10% more homes available than usual and 25% more price cuts, you can negotiate for properties that bring in strong cash flow.

The UK rental market faces a crisis as landlords exit at an unprecedented rate, shrinking supply while demand spikes from population growth and longer lifespans.

This means trouble for tenants with soaring rents but opens doors for sharp investors, landlords, and buyers to profit.

Using HMRC data and lessons from Scotland’s rental crunch, here’s the breakdown from Property accelerator..

Why landlords are quitting

Tax Pressures (Section 24): Landlords are taxed on gross rent without deducting mortgage interest, crushing profits. Higher-rate taxpayers (40-45%) lose money if mortgage costs exceed half their rent [HMRC, 2025].

High Interest Rates: 57% of landlords have mortgages, and buy-to-let rates at 5.7% inflate costs, squeezing yields [NRLA, Q2 2025]

Tough Regulations: Fines, property seizures (e.g., 18 properties taken for five years), and anti-landlord sentiment drive exits [Property Week, August 2025].

The data

93,000 properties are projected to exited in 2025, a 50% jump from 65,000 in 2024 [HMRC, 2025]. 

This cuts the number of individual landlords by 6% in a single year, a steep decline amid rising demand [HMRC, 2025].

Key stats:

• Q4 2024: 40,000 ex-rentals listed for sale; only 3,600 re-let by Q1 2025 [Savills, Q1 2025].

• Q1 2025: 6,520 households faced homelessness risk from landlord sales, up 20% YoY [Shelter, Q1 2025]

• Broader Trend: 26% of landlords sold at least one property in 2024, vs. 8% buying [NRLA, Q4 2024].

Rents reflect the supply shortage.. Up 10% in 2024, 7% in 2025 so far, with forecasts of 10%+ in 2026 as supply shrinks further [Zoopla, August 2025]

In London, 100 applicants per property is standard; Edinburgh hits 200 [Rightmove, Q3 2025].

Profit from the chaos

This landlord exodus is a goldmine for investors, landlords, and buyers who move fast. 

With 93,000 ex-rental properties flooding the market (many below value for quick sales), here’s how to profit:

Investors: Target ex-rentals in auction hotspots like North-West and Yorkshire for 6%+ yields post-refurb. Use BRRRR (Buy, Refurbish, Refinance, Rent) to recycle capital. Focus on HMOs or serviced lets in cities like Leeds or Manchester, where demand outpaces supply.

Landlords Staying In: Switch to limited companies for mortgage interest relief. Lock in sub-5% fixed-rate mortgages now [Moneyfacts, September 2025]. Boost yields with energy upgrades (EPC lifts rents 10-20%) or short-lets in tourist areas [Zoopla, Q3 2025].

First-time buyers: Set Rightmove alerts for ex-rental sales (736k listings market-wide) and leverage stamp duty relief before it expires [HMRC, 2025]. Get mortgage pre-approvals to compete in crowded viewings (100+ applicants norm) [Rightmove, Q3 2025].

Why the North-East is down

The June–August 2025 auction market in the North-East shows sharp declines (Essential Information Group, August 2025):

• Lots Sold: Down 40.9% from 689 to 407 [Essential Information Group, August 2025].

• Funds Raised: Dropped 27.4% from £44.0M to £31.9M

• Success Rate: Fell 17.8% from 81.9% to 67.3%

• Residential Hit: Sales crashed 45.3% (675 to 369 lots), though commercial funds jumped 181.7% (£2.3M to £6.4M) [Essential Information Group, August 2025].

Economic issues—manufacturing job losses (-0.9%, July 2025) and slower wage growth (4.0% YoY vs. 4.9% in Scotland)—make buyers picky, skipping overpriced or fixer-uppers in County Durham or Tyne and Wear [ONS, September 2025]. Lots offered fell 28.1% to 605, but oversupply lingers

Auctions signal trends

Auctions often predict broader shifts, as sellers list distressed assets first.

The North-East’s 40.9% drop contrasts with national gains (lots sold +15.3% to 1,113) and Yorkshire’s surge (+20.0% sales, +41.8% funds to £96.1M) [Essential Information Group, August 2025].

This slump hints at a wider slowdown if 5.7% buy-to-let rates and flat GDP (0% July, 1.3% yearly) persist [Moneyfacts, September 2025; ONS, September 2025].

Potential to cash in for investors

Profit from the dip by targeting North-East auctions:

• Buy Cheap: Snap up residential lots under £100k in Newcastle, where demand holds due to population growth (+1.3% UK-wide) [ONS, September 2025].

• High Yields: Refurb for 6.5-7.5% HMO yields, leveraging 10%+ rent hikes forecast for 2026 [Zoopla, August 2025; Rightmove, Q3 2025].

• Secure Discounts: Use the 45.3% sales drop to get 20-30% off market value [Savills, Q1 2025].

• Plan for Rebound: Hold for 1.5-2% price rises by Q1 2026 as supply tightens (736k listings, down 25k) [Property Industry Eye, September 2025].

That's it for this week folks. Each week we'll cover strategies, updates and insights to help you succeed in real estate. We love this stuff!

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