Lettings Market Shows Resilience Amid Post-Budget Tax and Legislative Changes

Why It Matters

The resilience signals sustained investor confidence in the private rented sector and suggests that policy shocks may have limited short‑term impact, preserving housing supply for renters. It also highlights a strategic shift toward long‑term tenant relationships, influencing future yield expectations.

Key Takeaways

• 51% landlords keep or expand portfolios
• 46% prioritize tenant affordability over costs
• Buy‑to‑let lending up 22.7% YoY Q3 2025
• New buy‑to‑let companies rose 21% in 2025
• Tenancy supply expected to tighten next year

Pulse Analysis

The Autumn Budget introduced a suite of tax adjustments and regulatory tweaks that many analysts feared would trigger a wave of landlord withdrawals from the private rented sector. Yet, the latest LRG Winter 2025/26 Lettings Report paints a different picture: more than half of surveyed landlords are either holding steady or expanding their holdings. This resilience is underpinned by a pragmatic focus on tenant affordability, which now outweighs traditional cost‑of‑ownership concerns. By anchoring rent‑setting decisions in tenant retention, landlords are cushioning their portfolios against short‑term market volatility.

Supporting this narrative, macro‑level data reveals robust growth in the buy‑to‑let ecosystem. UK Finance reports a 22.7% year‑on‑year surge in new buy‑to‑let lending for Q3 2025, while Companies House records a 21% jump in newly incorporated limited companies classified under the buy‑to‑let SIC code. These figures suggest that capital continues to flow into rental property investment, driven by attractive gross yields averaging 7.15%. Moreover, the concentration of larger landlords—those with five or more units—now accounts for nearly half of all tenancies, indicating a maturing market structure that favors scale and professional management.

Looking ahead, the market’s steadiness carries several strategic implications. For investors, the data signals that the sector remains a viable long‑term asset class despite fiscal headwinds, encouraging a shift toward quality‑focused portfolios rather than aggressive rent extraction. Tenants, however, may face tighter availability as two‑thirds of landlords anticipate reduced supply in the coming year. Policymakers and industry bodies will need to balance these dynamics, ensuring that affordability initiatives do not inadvertently constrain the rental stock that underpins the sector’s resilience.