Buy-to-let investors are locking in losses at a rate not seen in years. Brokers now face a client base weighing exit over expansion
Losses realised by taxpayers selling residential property investments rose 32% last tax year to £1.15 billion, up from £870 million the year before. The figures come from a Bowmore Wealth Group study using data supplied by HMRC. They reflect only losses locked in through actual sales; paper losses across the wider buy-to-let (BTL) sector are likely to be significantly higher.
September’s Lloyds House Price Index shows values have been broadly flat over the past twelve months. In London, a market carrying a high concentration of BTL portfolios, prices fell 2.2% year-on-year.
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Why are buy-to-let landlords selling at a loss?
David Floyd, head of private clients at Bowmore Financial Planning, said that stagnating values have eroded the capital growth that historically made modest net yields tolerable. Rising mortgage costs, upkeep and compliance obligations have squeezed those yields further.
The Renters’ Rights Act has recalibrated the risk profile of the entire asset class.
“BTL investors are looking at the growth in global stock markets and the high yields on UK Government bonds,” Floyd said. “They are asking themselves if they should still be in an investment that has relatively low net yields.”
“The new Renters’ Rights Act added an extra level of jeopardy and risk into being a landlord,” he said.
The legislation received Royal Assent in October 2025 and came into force on 1 May 2026. It abolishes Section 21 no-fault evictions and restricts rent increases to once per year with mandatory notice periods.
How does the Renters’ Rights Act impact mortgage brokers?
Brokers advising BTL clients are navigating a market where the primary question has changed. It is no longer about finding the best rate — it is about whether to hold or exit. As buy-to-let remortgage activity rises in response to the Act, understanding portfolio economics has become as important as product knowledge.
“A lot of BTL investors found that the burden of being a landlord, as opposed to a stock market investor, was surprisingly high,” Floyd said.
Net yields were already low, Floyd added, propped up by house price growth that has since stalled. He also said that the prices of many flats have fallen sharply.
For brokers, the shift opens a clear advisory opportunity. Landlords on thin yields or in negative-equity positions will need help modelling the cost of holding against the tax consequences of selling.
The Act has also exposed gaps in how lender mortgage conditions were written before 1 May 2026. Brokers who understand those gaps are best able to support portfolio clients.
Where landlords sell to owner-occupiers, stock leaves the private rental sector permanently. For brokers with first-time buyer clients, that shift may open discrete windows with motivated vendors.
Clients who exit need to understand the full cost. Those who stay need to understand what the new legislative environment demands of them.
