"The Autumn Budget created uncertainty, but it has not created the crisis some predicted"
- Allison Thompson - LRG
The UK lettings market has absorbed the pressures of the Autumn Budget with greater resilience than many predicted, according to new research from property services group LRG, which shows the majority of landlords choosing to hold or expand their portfolios rather than exit the private rented sector.
LRG's Winter 2025/26 Lettings Report, based on a survey of landlords and tenants across England and Wales, found that 51% of landlords plan to maintain their current portfolio or increase it following the Budget's tax measures. The findings point to a sector in strategic recalibration rather than freefall.
Tenant affordability drives rent-setting decisions
Despite cost pressures from taxation and regulation, landlord behaviour on rents has been notably restrained. Tenant affordability and the need to retain good tenants ranked as the single most important factor in rent-setting decisions, cited by 46% of landlords, placing it ahead of running costs, regulatory pressures, and tax obligations.
Nearly half of all landlords have not changed how they set asking rents over the past year, suggesting the sector is absorbing cost increases rather than passing them directly to tenants.
That restraint carries weight in a market where supply is under pressure. Nearly two-thirds of landlords expect supply to tighten further over the next 12 months, and half of tenants already report having less choice than a year ago. Against that backdrop, the decision by many landlords to hold rents steady is a meaningful indicator of how committed operators are prioritising long-term tenant relationships over short-term yield.
Clarity itself is driving confidence
When asked which Budget announcement had most influenced their outlook, the most common answer among both sales and lettings respondents was not a specific tax measure. Instead, 38% cited the absence of major disruption, specifically "no major changes, I can now move forward with my plans," as the factor that shaped their thinking most. In a period defined by prolonged uncertainty, predictability has become a confidence driver in its own right.
The contrast between the lettings and sales markets is instructive. While 39% of sales respondents described themselves as full steam ahead or more confident than before, lettings respondents showed far less volatility in either direction.
A third reported unchanged confidence levels, and fewer had completely changed course compared with their counterparts in sales. The lettings market, built on longer relationships and less transactional churn, tends to respond to structural shifts rather than short-term signals.
Buy-to-let incorporations hit record levels
Broader market data reinforces the picture of a sector in strategic rather than reactive mode. According to UK Finance, new buy-to-let lending rose 22.7% by volume in Q3 2025 compared with the same period a year earlier, with average gross rental yields reaching 7.15%.
LRG's own analysis of Companies House data tells a striking story. 67,114 new limited companies were incorporated under the buy-to-let SIC code in 2025, a 21% increase on 2024's figure of 55,603, with January 2026 already running 10% ahead of the same month last year. The upward trend stretches back to 2015 without interruption.
This is not the behaviour of a sector in panic. It is the behaviour of a sector professionalising, with landlords restructuring for the long term rather than heading for the exit.
The shift in who is letting reinforces that conclusion. According to the 2024 English Private Landlord Survey, commissioned by the Ministry of Housing, Communities and Local Government, landlords with five or more properties now account for 49% of all tenancies despite representing just 17% of all landlords.
The share of landlords operating through a limited company structure has nearly doubled since 2018. The private rented sector is not shrinking. It is consolidating around committed, professional operators.
What this means for landlords and tenants
For landlords considering their position, the data highlights several themes shaping the market:
- The majority of active landlords are staying in and planning for the long term
- Limited company structures are increasingly the vehicle of choice for portfolio growth
- Tenant affordability is the primary consideration in rent-setting, ahead of tax and regulation
- Supply is expected to tighten, but remaining landlords are not responding with aggressive rent increases
"The Autumn Budget created uncertainty, but it has not created the crisis some predicted," said Allison Thompson, national lettings managing director at LRG.
"What we're seeing is a market finding its level. Landlords who have decided to stay are doing so strategically, with affordability and tenant retention at the centre of their thinking rather than short-term yield."
"That's a meaningful shift, and one that's good for the long-term health of the private rented sector. The lettings market has always been more resilient than the headlines suggest, and this data shows that resilience in action."
With buy-to-let incorporations rising, lending volumes recovering, and the committed core of the landlord market actively investing, the trajectory for the UK lettings market points toward further consolidation rather than contraction. Whether supply can keep pace with demand from tenants remains the central question for the year ahead.
