Landlord taxation has overtaken regulation as the main barrier to fresh buy-to-let investment, with 28.3% of landlords identifying tax as the biggest factor stopping them from buying more property, according to new Benham and Reeves research.
The survey found just 3.9% of landlords plan to expand over the next 12 months, while 62.7% expect to hold their current portfolio and 27.2% intend to sell some stock or leave the sector altogether.
That split leaves the market in a holding pattern rather than a recovery phase. Landlords may still believe in residential property over the long term, but many are no longer willing to add capital while tax costs keep eroding returns and clouding exit decisions.
Landlord sentiment holds but expansion plans stay weak
Research commissioned by Benham and Reeves found 50.6% of landlords still see residential property as a good long-term investment. But confidence in the wider private rented sector was much softer, with 39.1% saying they felt either somewhat or very unconfident about its long-term future, against 33.9% who remained confident.
More than three quarters of respondents said buy-to-let looks less attractive than it did five years ago. At the same time, 36.9% said more favourable landlord taxation would be the single most effective change if ministers want investors to buy again. A faster possession process came next at 12%, followed by lower stamp duty at 13.7%.
Marc von Grundherr, director of Benham and Reeves, said landlords had not lost faith in property itself, but the operating environment had become much less attractive.
This follows Residential Landlord’s earlier reporting on how tax and transaction costs still shape investor timing and July coverage of the tax and policy pressure still hanging over landlord decisions. The latest survey suggests those concerns are now doing more damage to expansion plans than regulation alone.
Why tax pressure matters more than the headline optimism
Landlords who simply maintain existing portfolios do not add new rental supply. If the gap between those holding steady and those willing to expand stays this wide, the sector risks drifting into a long period of low investment, limited stock growth and tighter competition for tenants.
The figures also cut against the idea that compliance reform is the only reason investors are stepping back. For many landlords, the harder problem is that even a well-run property can look less compelling once income tax, stamp duty and sale costs are all taken into account.
That leaves policymakers with a difficult choice. If they want more rental homes without relying solely on institutional capital, they will have to confront the tax burden facing smaller and mid-sized investors rather than assuming confidence will return on its own.
Opinion
Landlords can absorb regulation when the sums still work. What they struggle to absorb is a tax regime that keeps asking for more while offering less certainty in return. If ministers want supply to grow, this is the pressure point they will need to address.
