Brokers report they have seen a growing number of tenants say they have been given first refusal to buy the property they are renting over the last two months.

It is believed this is due to a combination of the new energy performance certificate (EPC) rules coming in 2025, an economic environment that is making it more difficult to produce yield, and property prices being a record-high levels.

Shaw Financial Services founder Lewis Shaw says he has indeed seen this play out, “Often with an element of gifted equity.

“Off the back of that, I’ve spoken to several brokers heavily involved in the buy-to-let (BTL) space and they’re seeing lots of their landlord clients looking to offload the parts of their portfolios that are either low yielding or have an EPC below C. We are arguably witnessing the start of the Great Landlord Sell-off as BTL becomes a less attractive investment due to tax changes in interest relief, stamp duty land tax and new EPC rules due to hit in 2025.”

Shaw continues: “For BTL landlords, selling to their tenants makes perfect sense: they can ask agents what the market value of the property is and then sell directly to the tenants to avoid any expensive agents’ fees, not to mention the hassle of getting involved in chains. Moreover, any reduction in price that tenants can use towards their deposit essentially reduces the capital gains tax payable by the landlord on sale.”

Meanwhile, Harmony Financial Services director Imran Hussain comments: “Dinner party landlords are now looking at the forthcoming EPC requirements and are deciding to sell at arguably the top of the market.

“This does give an opportunity for some tenants to purchase but I have also spoken to a number of tenants for whom, due to their credit history, purchasing a property will not be on the cards for a few years yet. Let’s also not forget that less supply in the rental market will only push rents up unless more social and council housing is built, which will stretch many tenants to breaking point.”

And Peak Mortgages and Protection managing director Rhys Schofield says that the BTL market is “creaking”. He adds: “Rate rises have squeezed margins, the impending law change on EPC ratings gives a clear deadline to either bring the 75% of properties not at standard up to standard or sell.

“The net result is that some landlords want out. The organised landlords now have ways to tackle the issue pro-actively, as Enable has launched a great home energy review product where it’ll come up with a list of work needed to bring a property up to standard.

“And while landlords sit on the equity from two years of bumper price growth, they can raise the capital to do the works and maybe even grow their portfolio further. In some cases, of course, landlords have their own concerns over the cost of living and cashing in to ride out the economic storm ahead is proving very appealing.”

Not everybody is experiencing this, however. For instance, Staton Mortgages director Mike Staton says: “I feel the BTL market is still well and truly alive. I have accumulated a big portfolio of BTL clients over my career and only one of them has sold their properties during the past three years.

“For me, rental valuations are increasing significantly and although interest rates are increasing, these costs will inevitably be passed on to the tenant through rent. This will then make it more difficult for tenants to get onto the property ladder as the disposable income will not be there to save for a deposit.

“For me, the landlord market is still fruitful and will continue to remain so. However, with the new legislations coming into play, such as licensing and EPC guidelines, I think we will see the death of the ‘cowboy’, who has no intention to care for the wellbeing of their tenants and just wants to make a quick buck. That will not be a bad thing.”

Yesterday, 6 September, Goodlord released the results from a survey it recently carried out showing that 67% of letting agents believe that increasing numbers of landlords will be exiting this year.