BTL Market Recovery, and how it looks so far in 2025

Let’s be frank…the past few years have not exactly been easy for some landlords. Tax changes, rising interest rates, and tougher regulations caused a lot of buy-to-let investors to panic and overreact. In fact, more than 70,000 landlords exited the market in 2023 alone, according to Hamptons. But here’s the good news, the market overreaction seems to have subsided - and there are growing signs that confidence is coming back.

So, what’s changed? And why are so many investors returning to the market?

The Pressure Is Easing

For a while, things looked a little bleak. The removal of mortgage interest relief, tighter rules around EPCs, and interest rates hitting a 15-year high pushed many landlords to the edge. Higher borrowing costs meant slimmer margins…especially for those relying on mortgages to finance their portfolios.

But we’re now seeing a shift. Inflation is falling, and the Bank of England has held rates steady for several months. Many analysts believe a rate cut could happen later this year, with mortgage lenders already pricing in the change - average fixed mortgage rates have dropped from over 6.5% last summer to around 5% for some BTL deals as of mid-2025.

Rents Are Still Climbing

While landlords have been squeezed on one side, they’ve gained ground on the other: rents. With fewer rental homes available, demand is sky-high. According to Zoopla, UK rents rose by 6.6% year-on-year in May 2025, with even higher increases in hotspots like Liverpool, Glasgow, and Birmingham.

This imbalance between supply and demand is keeping rental yields attractive; especially for those who held on or are thinking of re-entering with a longer-term strategy. Landlords who bought five or ten years ago are now seeing significantly improved returns, even with the higher interest rates.

A More Stable, Professional Market

The recent sell-off has cleaned up the sector in some ways. The “accidental landlords” and overleveraged investors are mostly out, what’s left is a more experienced and focused group. And with professional landlords and even pension funds entering the game, there’s a growing sense that BTL is maturing into a more stable, long-term investment class.

So, What Now?

If you're a UK investor thinking about buy-to-let, this could be a smart time to look again. With rates stabilising and rents still rising, the fundamentals are starting to line up. It’s not the wild-west gold rush of 2015, but it’s a much healthier, more sustainable landscape.

And let’s face it - people will always need somewhere to live.

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