Why landlords are selling up or holding on in 2026

Strip out the noise and the sell-or-hold decision in 2026 comes down to three numbers: the after-tax return on the equity tied up in the property, the mortgage rate you will pay at your next refix, and the cost of getting out. The Renters' Rights Act matters, but mostly because it changed the third number, not because tenants gained rights most decent landlords already respected. Tax depends on your personal circumstances, and this is general information rather than advice.

Run the return on equity, not the yield

Gross yield flatters almost every mortgaged landlord. Take a £250,000 property with a £120,000 interest-only mortgage at 5%, let at £1,150 a month. Rent is £13,800 a year, running costs £2,500, interest £6,000. Because the Section 24 rules tax the profit before interest, a higher-rate taxpayer pays 40% of £11,300, which is £4,520, minus a 20% credit on the interest of £1,200. The tax bill is £3,320.

Cash left after costs, interest and tax is £1,980 a year. The equity in the deal is £130,000, so the true return is about 1.5%, before voids and before a boiler goes. A single month empty takes £1,150 of the £1,980, and a £1,200 boiler wipes most of the year. Any capital growth sits on top, which is the honest counterargument, but on flat prices the 1.5% is the whole return. That sum, run honestly at the next refix quote, is what is driving most of the selling. An outright owner on the same rent keeps roughly three-and-a-half times as much cash after tax, which is why unmortgaged landlords are largely staying put.

The Act changed the cost of leaving

Since 1 May 2026 every tenancy in England is periodic and section 21 is gone. A landlord who wants to sell with vacant possession uses Ground 1A, and the government's guidance for landlords sets the terms: it cannot be used in the first 12 months of a tenancy, the notice period is four months, and after using it the property cannot be re-let or re-marketed for letting for 12 months.

That last rule is the one to respect. Serve notice to sell, fail to sell, and you cannot simply put a tenant back in; the property sits empty or you cut the price. So the calm route is the one we cover in our separate article on selling a buy-to-let with tenants in place: sell to another investor with the tenant staying, take a modest price discount, and skip the void, the four months and the re-letting ban entirely.

The exit tax is known and stable

Capital gains tax on a sale is 18% within the basic rate band and 24% above it for 2026 to 2027, with a £3,000 annual exempt amount, and the gain on a UK residential sale must be reported and paid within 60 days of completion. None of that changed this year, which removes the panic-selling argument: waiting does not currently make the exit tax worse.

Who holds, who sells

The pattern in 2026 is a sort by balance sheet. Outright owners, basic-rate taxpayers and incorporated landlords who still deduct their interest in full are holding, and some are buying from the leavers. Heavily mortgaged higher-rate taxpayers on the wrong side of the Section 24 arithmetic are the sellers, and refix dates are the trigger.

So diary the decision, do not agonise over it. Three months before your fixed rate ends, get the refix quote, rerun the £ sums above with it, and act on the answer. If the answer is sell, compare conveyancing quotes for the sale early, because a tenanted investment sale needs a solicitor who has done one before.