The United Kingdom is grappling with an escalating tenant crisis, witnessing the highest number of renters since the turn of the millennium. Rents have also soared at the same time and you’d think that’s jackpot time for landlords. But mortgage rates might just rain on their parade.

According to a November report by Hamptons estate agency (as seen by Fortune), landlords are on a property-selling spree for the eighth year running.

In 2023, around 27,520 rental units are saying goodbye, a dip from last year’s 47,250. Still, it’s a telltale sign that landlords are downsizing their portfolios, grappling with bulging mortgage bills and tighter rules.

Landlords are grabbing only 11.2% of all homes sold in the U.K. That’s the lowest slice since 2010, except for the blip in 2020.

Meanwhile, rents are riding a rollercoaster post-COVID.

Between March 2020 and October 2023, they’ve rocketed up by a whopping 26%.

Just in October, rents shot up 11.7% compared to the same month last year, according to Hamptons. And the number of available rentals nosedived by 43% from January to October, a wild drop compared to the same stretch in 2015.

“There’s a strong argument that landlords have been hit harder by higher rates than anyone else,” Aneisha Beveridge, Hamptons’s head of research wrote in the report. 

“The real supply issue facing the private rented sector hasn’t just been caused by landlords selling up, but also because there’s been little appetite among investors to purchase new buy-to-lets over the last few years. This has reduced the number of homes available to rent which is fuelling rental growth.”

Persisting pains for landlords

High mortgage rates have been among the key pain points for property owners, with many of them struggling to meet mortgage payments on time, Bloomberg reported Wednesday.

Landlords were also being slammed with 40% more mortgage interest in August compared to the same time a year earlier, reflecting an eye-watering level of cost increase. 

The problem is that some landlords secured mortgages on buy-to-let schemes at rock-bottom interest rates—but that pattern has since reversed.

In July, consultancy firm Capital Economics predicted that up to a fifth of rental homes could become unprofitable at a 6% interest rate (the current base rate is 5.25%), the Financial Times reported.

“Overall, we think that the financial stress faced by landlords will lead to a rise in buy-to-let arrears and forced sales, undermining the tight supply conditions which have helped support house prices of late,” the report said.

But mortgage rates aren’t the only source of pressure for landlords—policies on the removal of tax relief on mortgage payments and an impending Renters’ Reform bill which could make tenant evictions more complicated have added to the list of factors adding to landlords’ tensions, according to Bloomberg.

If the Labour government is voted into power in the upcoming elections, it could result in a stronger crackdown on landlords.

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Original: Fortune | FORTUNE: U.K. landlords are being forced to sell their properties despite surging rents