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14/7/25 8:13 pm
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Is this paradox a symptom of Britain’s housing crisis, a cooling housing market and an undersupplied rental market?
With experienced landlords leaving in their droves, we now see an influx of accidental landlords. That’s something the government never intended, with a policy of professionalising the private rented sector, it somehow goes against the grain for the government.
As Britain’s housing market cools and prices stagnate, a growing number of homeowners are being pushed into becoming “accidental landlords” — letting out homes they can’t sell.
It’s a striking paradox: while seasoned landlords are exiting the sector under the weight of tax and regulation, new ones are joining it out of necessity. This article explores the market forces, political uncertainty and unintended consequences driving this trend — and what it means for the future of the UK’s private rented sector.
Landlords have forever entered the private rented sector (PRS) and taken on the mantle of “landlord”, often reluctantly, through necessity, for multifarious reasons: they can’t sell but want to move away; they inherit a property and decide to keep it, or there’s some dispute over inheritance so it’s convenient to let it out while that’s sorted out; two people with properties decide to cohabit, so they let out their spare property, and people move away for work or pleasure and want to let out their home temporarily.
There are numerous reasons, and this is the right of anyone in a free country to do with their own property as they please. The upshot: another property enters the lettings market owned by an amateur landlord while many experienced landlords are deciding to leave.
Britain’s housing market is once again at a crossroads, this time with an ironic twist. On the one hand, buy-to-let investors are leaving the sector in droves, pushed out by rising costs, tax hikes and a mountain of new regulation. On the other hand, a new cohort of reluctant property owners, “landlords” is being pulled in, forced to let their homes to reduce holding costs after finding the market too weak to sell.
It’s the curious case of the “accidental landlord”, a growing group who never intended to enter the rental business but who now find themselves managing tenants, navigating complex compliance rules, and facing the same tax burden that has driven long-term landlords to the exit.
There is often a naïve view of what’s involved in becoming a landlord - even an accidental one with just one property. Many people imagine it’s just a matter of hiring an agent and the reset is just watching the rent flow into their account every month. The reality, as has been indicated above, is a bit different, to say the least.
Landlords need to have at least a smattering of knowledge of the legalities, which are on the point of a drastic change with the introduction of the Renters’ Rights legislation, and unless they have been lucky enough to engage an exceptionally good agent, they need to closely monitor what their agent is doing, or not doing which is more to the point. After all, the landlord takes ultimate responsibility.
After years of runaway house price growth, the market is losing momentum. Higher mortgage rates and economic uncertainty, combined with a squeeze on household incomes, have taken the wind out of the sails of the post-pandemic boom. Asking prices are proving sticky, but buyers are scarce.
In the Uk’s major cities such as London, Manchester, Leeds, Birmingham, Bristol, and Edinburgh, estate agents report homes languishing on the market for months unless vendors slash prices. Yet, for many homeowners, accepting a lower price feels like financial defeat. Selling at a discount can wipe out years of growth in equity. For those who bought during the 2021–2022 surge at peak valuations, it’s disastrous.
So rather than sell at a loss, some are opting to rent out instead — often reluctantly. “I didn’t want to let it out, not at my age,” said one homeowner in her late 70s quoted recently in the national press. “But agents are saying the same thing – you really have to drop the price to sell.” Her experience is far from unique.
For many of these reluctant landlords, letting is not about investment or trying to earn money, it’s about damage limitation. They see renting as a temporary measure, a way to cover their mortgage payments and council tax while waiting for the market to recover.
But entering the rental sector today is no simple matter. Compliance requirements are extensive and growing. Even a single letting requires meeting energy performance certification (EPC) standards, electrical and gas safety checks, deposit protection, tenancy agreements compliant with the latest legislation, and potentially selective licensing depending on the local authority.
Those owners with a mortgage will need to switch to a buy-to-let mortgage and they will also need to speak to their insurers about specialist landlords’ insurance.
Then there’s the tax position. What used to be a relatively straightforward income stream is now heavily taxed, and in some cases the extra income will push people into higher tax bands. Mortgage interest relief for individuals has long been restricted to the basic rate of tax, meaning that higher-rate taxpayers can find themselves paying tax on paper losses.
In addition, capital gains tax may apply to any eventual sale, and Labour’s Autumn Budget 2025 is widely rumoured to tighten the screw further, potentially cutting the annual CGT exemption or even aligning rates more closely with income tax and imposing National Insurance (NI) on landlords’ rental income. That prospect alone is enough to unsettle even the most casually minded landlord.
Anyone contemplating short term letting should consult an accountant / tax advisor and seek out a competent and qualified letting agent.
Meanwhile, many professional landlords have been calling it a day. According to industry data, the number of properties available to rent has been steadily falling since 2017, when the Section 24 mortgage interest relief changes began to bite.
Landlords have faced a steady drip feed of new regulations: energy efficiency standards, licensing schemes, rent control experiments in the devolved nations, and now the long-delayed Renters Reform Bill reforms which abolish the cherished Section 21 ‘no fault’ evictions and fixed term tenancies.
Each of these measures, individually justified on policy grounds, collectively adds to the administrative and financial burden of letting. Small-scale landlords — often with just one or two properties — have borne the brunt of this onslaught, encouraging them to sell to owner-occupiers or large-scale landlords running incorporated businesses.
This has created a paradox. Government policy, designed to professionalise the sector and improve tenant conditions, is simultaneously reducing the supply of rental homes. Yet the economic slowdown – a generally stagnating economy - is now pushing new, unprepared homeowners into the very role others are desperate to escape.
The result of all this is a tightening rental market. Despite a cooling sales market, rents have continued to rise in many regions due to chronic undersupply and high demand from those who otherwise struggle to raise money for deposits to buy. In London, average rents have jumped by double digits over the past two years, leaving tenants competing fiercely for a shrinking pool of properties.
Into these conditions step accidental landlords. They want to let homes that would otherwise be owner-occupied, and typically they envisage, for short periods, often without the required experience or appetite for property management.
Agents report an increase in the number of owners seeking full-service management to handle the legal and practical complexities of letting. But the costs of professional management, combined with maintenance and compliance obligations, can quickly erode any profit that remains.
Adding to the uncertainty is also the political risk. Labour’s Autumn Budget is expected to include a range of property tax reforms aimed at rental property. The early indications suggest that the focus will be on middle class wealth and property ownership, with potential changes to capital gains tax, inheritance tax reliefs, and possibly a review of council tax bands.
History has shown that even the anticipation of such moves unsettles the market. Previous rounds of reform, such as the 5% stamp duty surcharge on second homes, has triggered lots of forced sales, portfolio restructuring, and short-term distortions in demand.
For accidental landlords, these shifts could make short-term letting a hassle, a worry and arrangement financially debatable. Yet for those unable to sell, there may be no alternative.
Unlike seasoned investors, these new entrants often underestimate the realities of managing tenants. The letting process can be time-consuming, legally fraught, and emotionally draining if a bad tenant is engaged. Even with an agent in place, the responsibility for repairs, disputes and compliance ultimately rests with the owner.
For letting agents and property managers, the rise of accidental landlords is both an opportunity and a challenge. On the one hand, it sustains their business when otherwise they are losing landlords; on the other hand, it brings in clients who are naïve, and unfamiliar with the landlords’ role, with expectations that perhaps don’t meet with the reality of their obligations with renting, and they may expect unrealistic returns.
Education is needed here. Many homeowners view letting as a straightforward stopgap, one where the technicalities can be largely ignored. They are unaware that even short-term or single property letting demands full compliance with the increasingly stringent letting regulations and the same legal framework a portfolio landlord operates in.
A good agent will guide these newbie landlords through the maze of responsibilities, from the importance of selecting tenants to protecting deposits, complying with property checks and meeting energy efficiency standards.
The paradox of landlords leaving the PRS while others are forced to join underscores a deeper structural problem in Britain’s housing market. A shortage of good rental accommodation and falling house prices means the market is finely balanced between affordability pressures for both landlords and tenants, increasing regulation and taxation distortions.
If the exodus of professional landlords continues the market is unlikely to be bolstered by the smaller number of accidental landlords entering. They are small in number and treat letting as a short-term fix. The longer-term availability of rental stock could continue to shrink further. That would only intensify upward pressure on rents and reduce mobility for tenants. This is precisely the opposite trend of what the policymakers say they intend.
The rental market in Britain has been in decline (in numbers) since the introduction of the Section 24 removal of tax relief of buy-to-let mortgage interest. Could there yet be a turning point where the policy makers see the light?
A recent report produced by the UK Collaborative Centre for Housing Evidence highlights the importance of the private rented sector (PRS) to the rental market in Scotland over the last 30 years, equally applicable in England.
The Scottish Government has been the most enthusiastic supporter of landlord regulation and rent controls, resulting in a substantial decline in the number of small-scale landlords, as renting out houses became less profitable.
But according to letting agents DJ Alexander Ltd – the largest lettings and estate agency in Scotland – the report shows that between 1991 and 2024 the bulk of rental housing provided by the sector has been “dominated by small-scale, part-time, investor landlords”.
The report says: “In the context of a housing emergency, and with alternative forms of private rented sector provision (i.e., build-to-rent and mid-market- rent) characterised by low levels of supply, the report concludes that policymakers need to focus on better understanding and supporting the small-scale private landlords that currently make up the bulk of the sector in order to prevent further attrition in terms of landlord and property numbers.”
The report calls for “greater support and understanding of small-scale private landlords through regular surveys and the establishment of a new landlord panel to advise and consult with the government over the future direction of the sector”.
It also states that the absence of regular, reliable survey data has led to “an overreliance by policy makers on feedback from consultations, which are often completed by a limited number of interested parties, and make it difficult to claim that policy interventions are evidence based. They therefore risk being ineffective and prone to unintended consequences.”
David Alexander, chief executive at DJ Alexander Scotland, has said:
“The Scottish housing system currently faces unprecedented challenges over supply, affordability, and energy efficiency. The pandemic, subsequent cost-of-living-crisis, and the current ‘housing emergency’ have, as this report explains: “resulted in policy makers scrambling to generate solutions within a system that is not amenable to quick fixes, and which has been subject to years of cumulative legislative change.
“Many unintended, but not entirely unforeseen consequences have arisen in the PRS from recent interventions. For example, a rise in rental arrears following the introduction of the ‘eviction ban’ and an increase in market rents following the introduction of the ‘rent cap’.
The report found that policies focused on the PRS would appear to discourage private investment and are likely to further exacerbate imbalances between supply and demand.
The report specifically focuses on the Housing (Scotland) Bills’ introduction of rent controls, and the recent increase in the Additional Dwelling Supplement in Scotland from 6% to 8%.
Alexander adds further: “This increasing legislative burden, high costs, low yields, and the availability of lower risk and higher yielding investments elsewhere, have already made the sector less attractive to investment, and there is evidence that landlords are leaving the sector.”
We’re told that the UK government’s drive to build more houses will solve the rental shortage problem, but its target to build 1.5 million homes during this Parliament looks increasingly unlikely to be met. Analysis by property consultants Hamptons International shows that the number of builders operating in Britain has fallen by 1507 (1.7 per cent) in the year to September 2025, that’s the highest number in a decade.
In September 12,904 home builders were either in administration or in the process of being wound up, a 5 per cent year on year increase and 63 per cent more than in September 2022.
The Labour government has promised to build 1.5 million new homes by 2029 mainly through relaxing the planning system rules, but currently less than 29,000 building projects were given permission by local authorities to the year ending June 2025. In the three months to June 2025 only 7,000 applications were received, the lowest number since records began in 1979
The rise of the accidental landlord and the demise of the experienced small-scale landlord is a symptom of a wider malaise in the UK housing market, a symptom of a market out of kilter where supply and demand, taxation, regulation, and economic uncertainty converge into misery for many – landlords, tenants and agents.
Lack of policy direction and progress highlight the law of unintended consequences: as successive UK governments have piled on pressure to reform the private rented sector, either through ideology or inefficiency, ordinary homeowners, landlords and tenants are being dragged into the chaos by default.
For some accidental landlords it will be a case of a manageable exercise through a temporary stop-gap arrangement, but for others it could be a learning curve and a costly and stressful misadventure they will never forget.
Until stability returns to the housing market, prices, policy, and confidence, the accidental landlord may become more of a fixture of Britain’s housing landscape.
[Main image credit: Alena Darmel]
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