Spiralling landlord costs has led to nearly 4,000 buy to let properties being sold every month last year, official figures reveal.
It's the first drop in the number of rental homes being available in the UK for 18 years.
The figures are contained in a Ministry of Housing, Communities and Local Government report which reveals that the number of rental properties in England fell by 46,000 last year to reach 4.79 million.
The drop comes two years after landlords were hit by tax reforms and the introduction of the stamp duty surcharge which has hit profits for thousands of landlords in the UK.
The Association of Residential Letting Agents’ chief executive, David Cox, said: “The legislative changes that landlords have faced over the last few years has led to buy to let becoming increasingly unattractive for investors.
‘Landlords are either choosing to exit the market or hike rents’
“Landlords are either choosing to exit the market or hike rents for tenants to avoid the increasing costs.”
The figures coincide with findings published by Simple Landlord Insurance which highlight that one in three landlords with one rental property are looking to sell up and leave the buy to let sector.
However, findings from research firm Capital Economic highlight that this decline in rental properties may not last.
A spokesman said: “This reduction in rental properties could be a one-off with the weakest investments being weeded out by landlords looking to trim their debt levels.”
He added that buy to let mortgage lending is now softening which suggests that the numbers of landlords looking to sell off their investments may be intensifying.
Rents in UK to rise by £23 a month
Meanwhile, tenants are being warned that landlords could be putting up rents by £23 a month as pressure mounts on their profitability.
That's the equivalent of a 2.5% rent rise this year with landlords looking to cover their increasing costs.
According to MakeUrMove, an online letting agent, the average rent of £918 in the UK could see rents increasing by £23 a month.
However, the firm says that for tenants in London the rent rise will be more severely felt as they face an average rent of £1,274 a month.
The firm's managing director, Alexandra Morris, said that landlords they questioned said that the rent rises were being introduced as a last resort and they wanted to keep their tenants happy.
She added: “Rents have increased already year-on-year and it's likely that this year will see tenants having the biggest impact yet from changes to the private rental sector.”
