The UK's private rented sector recorded its largest decline this century in 2025, falling £48bn in value as buy-to-let landlords continued to exit amid higher taxes and tighter regulation, according to Savills.
The drop stands in contrast to the broader housing market, which grew 3.8%, or £336bn, over the past three years. The PRS was the only tenure to contract over that period, declining 5.1% and shedding £79bn in value since 2022, as rising property prices failed to offset the reduction in rental stock.
Owner-occupied housing, meanwhile, gained £185bn in value in 2025 alone. The increase reflects a growing number of mortgage-free homeowners alongside higher mortgaged ownership, supported by increased first-time buyer activity.
"Over the past 25 years, we've grown accustomed to a story of the private rented sector expanding at the expense of people's ability to get onto the housing ladder," said Lucian Cook, head of residential research at Savills. "But while deep-seated housing challenges remain, lighter regulation in the mortgage market and tighter oversight of the private rented sector are gradually beginning to shift that narrative."
"Changes in tenancy legislation, higher operating costs and increased mortgage rates have prompted many private landlords to reassess their portfolios," he continued. "Larger landlords, better equipped to absorb added costs and requirements, have taken on some of this stock, contributing to a more professionalised PRS. But others have been sold to owner-occupiers, reducing the sector's overall size."
Growth in owner-occupied housing has been broad-based. The value of mortgaged owner-occupied homes rose £197bn over the past three years, outpacing the £139bn increase in mortgage-free properties. A 4.7% rise in outstanding mortgage debt held by homeowners has underpinned much of that growth.
Cook noted that first-time buyer activity has held up relatively well, given post-financial crisis conditions. "With more former PRS stock available to buy, first-time buyer activity has been relatively strong in the context of post-credit crunch levels. This has been supported by the less stringent application of mortgage regulations, falling mortgage rates and rising wages."
Barriers to ownership persist, however. "There are still significant barriers to owning a home, and part of the growth in mortgage home ownership is down to people taking longer to pay off their mortgage debt," Cook said. "The reduction in homes available to rent will also continue to push up rents, posing challenges to those who are struggling to save for a deposit."
