27% of landlords heading for the exit: should you sell or stay?

More than a quarter of landlords in England say they are already on their way out of the rental market, five months after the Renters’ Rights Act scrapped section 21 and rewrote the rules on tenancies.

New research from flatshare site SpareRoom, based on a September 2026 survey of 668 landlords, found 27% are leaving altogether and 36% are cutting back. Among landlords with just one property, the exit figure jumps to 44%.

If you are one of the landlords weighing it up, the headline numbers matter less than your own. Below we set out what changed, what selling would cost you in Capital Gains Tax, how to get a property back if you sell with vacant possession, and a calculator that puts selling now side by side with holding on.

What the landlord survey found

SpareRoom asked 668 landlords whose rental properties are mostly in England how they feel about the market since the Act took effect. A large majority, 78%, said they have no confidence in it.

The split by portfolio size is the telling part. Small landlords are more likely to leave outright, while bigger landlords are trimming rather than quitting.

SpareRoom director Matt Hutchinson said it is “still early days” and that landlords are “still reacting to the changed landscape”, with some planning not to re-let once current tenants move on. SpareRoom also reports that room supply has entered negative growth.

Remember what a survey like this measures: intentions and sentiment, not completed sales. It is a strong signal, but it is not proof that a quarter of homes will leave the sector.

What changed on 1 May 2026

The government’s implementation roadmap confirms the core tenancy reforms took effect on 1 May 2026, and they apply to England only. Wales, Scotland and Northern Ireland have their own rules.

• No more section 21. Landlords can no longer use section 21 to seek possession.
• Periodic tenancies. Tenancies now roll on rather than running for fixed terms.
• Rent rises once a year. Increases go through a section 13 notice with at least two months’ notice, and tenants can challenge above-market rises at the First-tier Tribunal.

More is still to come. The landlord database starts rolling out from late 2026, and mandatory ombudsman membership is expected in 2028. The Decent Homes Standard timetable is still subject to consultation.

Rents are rising again, not falling

For landlords who stay, there is a counterweight to the gloom. Official figures show rent growth in England, after cooling steadily from its late-2024 peak, has picked up since the reforms took effect.

The ONS puts average private rent in England at £1,459 a month in August 2026, up 4.0% in a year. Annual growth had slowed to 3.4% in May. Across the UK the average was £1,400, up 3.8%.

House prices are moving much more slowly. The average home in England cost £293,000 in July 2026, up just 1.1% in a year. That gap matters to the sell-or-stay maths: income is growing faster than capital values right now.

Room rents tell the same story. SpareRoom’s own rental index put the average UK room at £761 a month in Q2 2026, with six of the UK’s nine regions hitting record highs.

The CGT bill if you sell

Capital Gains Tax is usually the biggest single cost of getting out, and it applies UK-wide. Here are the current rules from HMRC guidance on gov.uk for the 2026 to 2027 tax year.

Worked example: higher rate landlord

Sam bought a flat for £200,000 and it is now worth £300,000. Agent and legal fees on the sale come to 2%, or £6,000. The gain is £94,000. Take off the £3,000 allowance and £91,000 is taxable.

At 24%, the CGT bill is £21,840. After clearing a £150,000 interest-only mortgage, Sam walks away with £122,160.

Worked example: basic rate landlord

Priya has the same £91,000 taxable gain but has £20,000 of her basic rate band unused. The first £20,000 is taxed at 18% (£3,600) and the remaining £71,000 at 24% (£17,040).

Her bill is £20,640, only £1,200 less than Sam’s. On a large gain, most of it ends up at 24% whatever your income band.

Sell or stay calculator

Put in your own numbers. The calculator works out the cash you would keep if you sold today, and compares it with holding for a set number of years, collecting rent, and then selling. Your sell-now cash is assumed to earn a return in the meantime so the comparison is fair.

With the default numbers, holding for five years comes out ahead by around £18,000, mostly thanks to £21,600 of after-tax rent. Cut the rent to £1,000 a month and assume no price growth, and selling now wins by roughly £19,000. Your margin, not the national mood, decides this.

Getting the property back to sell

Most buyers pay more for an empty home, so sellers usually want vacant possession. With section 21 gone, a landlord in England who wants to sell now uses the new sale ground, Ground 1A. The government’s grounds for possession guidance sets the rules.

• Four months’ notice before you can apply to court.
• Not in the first 12 months of a tenancy. You can serve notice early, but it cannot expire before the tenant has been in for 12 months.
• No re-letting for 12 months. If you use the selling ground and the sale falls through, you cannot market or re-let the property for 12 months.
• Heavy penalties for misuse. Civil penalties of up to £7,000 for a first breach and up to £40,000 for serious or repeat breaches, and tenants can claim up to 24 months’ rent back.
• Older assured tenancies are excluded. Ground 1A cannot be used if the tenant has an assured tenancy created before 1 May 2026 that was not an assured shorthold tenancy.

Add it up and an exit can take six months or more from decision to empty property, then a sale on top. That delay should go into your calculation: rent keeps coming in, but so do costs, and prices can move.

The alternative is selling with the tenant in place, usually to another landlord. That avoids the notice period and the 12-month no-let risk, but investor buyers typically expect a discount, so test both routes with an agent.

What to do now: step by step

1. Get two or three valuations, both with vacant possession and with the tenant in situ.
2. Pull together your base cost. Find the completion statement from your purchase and receipts for any improvement works. These reduce your gain.
3. Run the calculator with realistic rent, costs and growth, then try a cautious version too.
4. Check the tenancy dates. If the tenant moved in less than 12 months ago, your earliest possession date under Ground 1A is later than four months from now.
5. Think about timing across tax years. A completion after 5 April falls into a new tax year with a fresh £3,000 allowance and a fresh basic rate band.
6. Set the CGT money aside on completion. You have 60 days to report and pay through HMRC’s online service.
7. If you stay, review your rent against the market and plan any increase through a section 13 notice, no more than once a year.

• Vacant possession and tenant-in-situ valuations
• Purchase completion statement and improvement receipts
• Current mortgage redemption figure, including any early repayment charge
• Tenancy start date and tenancy type checked
• Ground 1A notice dated so it expires after the first 12 months
• Estimate of CGT and income band for the tax year of completion
• Diary note: report and pay CGT within 60 days of completion
• Accountant or tax adviser booked before you exchange

FAQs

Are landlords really leaving because of the Renters’ Rights Act?

SpareRoom’s September 2026 survey found 27% of landlords with mostly English properties are leaving the market and 36% are reducing their portfolios. These are stated plans, not completed sales, but they point to shrinking supply.

How much Capital Gains Tax will I pay selling a buy-to-let?

After deducting the £3,000 allowance and allowable costs, gains are taxed at 24% for higher rate taxpayers. Basic rate taxpayers pay 18% on the part of the gain that fits in their unused basic rate band and 24% above it.

How long do I have to pay CGT after selling a rental property?

You must report and pay within 60 days of completion. Late reporting or payment can mean interest and a penalty.

Can I evict my tenant to sell now section 21 has gone?

In England you use Ground 1A. You must give four months’ notice, cannot end the tenancy within its first 12 months on this ground, and cannot re-let the property for 12 months afterwards.

Are rents going up or down after the Renters’ Rights Act?

Up. ONS figures show rents in England rose 4.0% in the year to August 2026, faster than the 3.4% recorded in May 2026, although the latest months are provisional.

Does the Renters’ Rights Act apply in Wales or Scotland?

No. The tenancy reforms covered here apply to England. CGT rates and the 60-day rule apply across the UK.