Who is buying the homes being sold by buy-to-let investors? – London Wallet

The UK’s private rented sector is shrinking, according to recent analysis from Savills, which shows it is the only part of the housing market to have fallen in value in recent years.

While the total value of UK housing rose by 3.8% – around £336bn – last year, the private rented sector dropped by 5.1%, marking three consecutive years of decline and a £79bn reduction in value since 2022. As landlords continue to leave the market, tenants in many areas face increased competition for fewer rental properties, raising questions about who is buying homes sold by buy-to-let investors.

New research from Pegasus Insight suggests that not all properties sold by landlords immediately exit the private rented sector. The latest Landlord Trends Q4 2025 data shows that more than a quarter of sales involved sitting tenants, with landlords typically selling an average of 1.8 tenanted properties. Around 30% of these homes were purchased by other landlords, keeping some stock within the sector.

However, a significant share is moving into owner occupation: 34% of sales went to first-time buyers and 29% to other residential buyers, indicating many homes are leaving the rental market. Overall, the findings point to a gradual contraction in available rental stock, despite some properties remaining within the PRS.

Mark Long, founder and director of Pegasus Insight, commented: “Landlord sales do not automatically mean a rental property disappears from the sector. In a meaningful minority of cases the property is simply being transferred from one landlord to another, and sometimes sold with tenants already in place.

“However, the overall direction of travel still points to a shrinking PRS. When a substantial proportion of landlord sales are going to first-time buyers or other owner occupiers, it inevitably reduces the pool of homes available for rent.

“Policymakers must recognise the cumulative impact of ever tighter regulation and rising taxation on landlords, particularly smaller operators. Many are deciding that the pressures and uncertainty are no longer worth it. This is significant because the PRS provides homes for around 20% of the UK’s households, so policy decisions affecting landlords ultimately have consequences for tenants too.”