Hundreds of thousands of landlords have left the market since the introduction of controversial tax changes three years ago, new research suggests.
There are some 222,570 fewer landlords now than in 2017, a drop of 8 per cent, according to research from estate agents Hamptons International.
As a result there are now fewer landlords in Britain than at any point in the past seven years.
Former Chancellor George Osborne first announced a tax raid on buy-to-let in 2015
Crucially, the decline correlates with the phasing out of mortgage interest tax relief, a move which has led to some landlords to pay thousands more in tax.
However, the number of private rented homes available has, despite taking a dip in 2017, stayed broadly the same, and has even seen a slight uptick over the past year.
This suggests that while some landlords are leaving the market, those with larger portfolios are snapping up existing rental properties.
As a result, the number of homes available to tenants remains broadly unaffected.
The average landlord's portfolio size has also grown over the same time period, suggesting it's the smaller 'accidental' landlords that are leaving the market.
Over the past few years the Treasury has hit buy-to-let investing from several different angles in an attempt to curb some of the tax incentives for landlords.
Former Chancellor George Osborne first announced a tax raid on buy-to-let in 2015 in the form of a three per cent surcharge on stamp duty on new buy-to-let purchases.
A further change arrived in April 2017 as landlords began to lose their tax relief under a rule known as Section 24, which forces them to pay tax on their rental income rather than just on their profit after mortgage costs.
From April this year it will be fully withdrawn and replaced by a 20 per cent tax credit.
The Bank of England also clamped down on mortgage lenders, forcing them to require landlords to earn a much higher ratio of rental income compared to their mortgage payments.
As a result the number of landlords is dwindling.
Meanwhile, last year a report from the Royal Institution of Chartered Surveyors found that the number of new landlords entering the market has been in decline for 13 quarters.
Olivia Kennedy, financial planner at Quilter said: 'Ministers have been under pressure to address the UK's housing situation.
'Many campaigners were critical of a system that they saw as favouring landlords ahead of aspiring owner-occupiers.
'It led the government to introduce numerous changes in order to reform the tax rules around buy-to-let.
'This has had the impact of dramatically increasing taxes payable by landlords, which has subsequently eaten into rental profits.'
Despite the recent tax and regulatory upheaval landlord confidence is actually on the up since the general election, according to Paragon.
A quarterly survey of nearly 800 landlords found that confidence rose across four of five measures during the fourth quarter of 2019 compared to the previous three months.
Landlord confidence in the UK financial market jumped, with 24 per cent rating the prospects as good or very good compared to just 9 per cent in July to September 2019.
Although landlords are less optimistic about the prospects for yields – gross rental income as a proportion of portfolio value – they still believe both rents and property prices will increase as a direct result of the election.
A quarter of respondents said rents would rise, compared to 1 per cent who predict a fall, whilst 32 per cent expect property prices to rise, against 14 per cent forecasting a decline.
Richard Rowntree, Paragon managing director of mortgages, said: 'After several quarters of declining optimism among landlords, it's pleasing to see the green shoots of recovery in confidence.
'Although still low compared to historic levels, a more certain political and economic landscape will hopefully provide the platform for confidence to continue to grow.'