UK Buy-to-Let Market Update: Autumn 2025

As we head toward the end of 2025, the UK buy-to-let (BTL) market continues to navigate a mix of opportunity, challenge and regulatory change. For letting agents, landlords, and investors, understanding where things stand is more important than ever. Below is a summary of recent trends, pressures, and what to watch out for.

What’s happening in Buy-To-Let right now​

Mortgage / borrowing costs are easing

• Two-year fixed BTL mortgage deals are averaging 4.88%, down from ~5.35% a year ago.

• Five-year fixed BTL deals are about 5.21%, slightly lower than a year back.

• Overall, the borrowing cost drop is partly due to lenders competing harder to attract landlords.

More product choice

• The number of BTL mortgage products has roughly doubled since September 2022.

• UK Finance data for Q1 2025 shows ~58,347 new BTL loans, worth ~£10.5 billion, up by ~39% in number and ~47% in value over Q1 2024. 

Rental yields & demand remain relatively strong

• Rental yields in the UK are holding up; UK Finance reports an average gross yield of ~6.94% in Q1 2025.

• Tenant demand remains high while supply of rental homes is under pressure. Many landlords are pulling back.

Landlords exiting, supply shrinking

• There is a continued decline in the number of rental listings. The RICS landlord instructions index is negative, indicating more landlords are leaving the market than entering.

• Several legislative & tax changes are in play or being proposed, adding uncertainty. Issues include proposed changes to tax treatment, national insurance levies, and new tenant protection laws (e.g. ban on “no-fault” evictions). 

Regional shifts in investment

• Investment is moving away from London and the South East toward the Midlands, North West, North East, and Yorkshire & Humber. These areas are seeing a larger share of new BTL purchases.

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What are the challenges

• Regulatory & tax/headwinds: Changes to tax reliefs (e.g. mortgage interest relief), potential new levies, more stringent tenant rights laws are creating concern among landlords.

• Uncertainty & risk: Because of upcoming Budget announcements, and evolving law (Renters’ Reform Bill etc.), many landlords are cautious about committing new investments.

• Affordability pressures: As borrowing falls, margins are still tight for many depending on location, condition of property, maintenance costs etc. Plus inflation and running costs remain a concern.

  
  

Opportunities & silver linings

• Lower borrowing costs + more product choices = better chances for landlords to refinance or take on new properties with more favourable terms.

• Rises in rental yields, especially in regions outside London, make investment more attractive.

• Regions with strong tenant demand but less competition for stock offer good value.

What this means for Buy-To-Let landlords

• Be strategic about where you invest: look at regional markets, yields, tenant demand. Your returns may be much better outside London / South East.

• Understand upcoming legal / regulatory risks. Getting ahead of compliance (tenant rights, standards, taxes) will be essential.

• For existing portfolios, reviewing financing arrangements (can you refinance? can you lock in better fixed rates?) could help preserve margins.