Much like the wider housing and mortgage landscape, the UK’s Buy to Let (BTL) market is fast
evolving. Financial pressures and regulatory challenges are driving some landlords to exit the
market, while others – including many professional investors – are doubling down by expanding and
diversifying their portfolios.
Brokers have an important role to play in supporting landlords as they navigate this dynamic
environment and seek to capitalise on new opportunities. In this article, we’ll examine the key
challenges and opportunities in the market today and explore the latest trends in the BTL space.
Economic and regulatory challenges
With profitability front of mind for landlords, rising costs over the past several years have been a key
concern.
While the Bank of England base rate has seen gradual decreases since August 2024, rates remain
significantly higher than pre-2021 levels. The market has changed significantly in the last few years,
and as a result, those landlords who have been on longer-term fixed rate deals will be remortgaging
onto considerably higher rates, potentially reducing their profit margins, and either forcing landlords
to sell, or driving up their rent prices to cover the shortfall. In addition, operational expenses have
been on the rise too, with inflation driving up the cost of maintenance and repairs, as well as
increasing landlords’ insurance premiums.
Adding to these economic headwinds are recent tax changes impacting landlords. Landlords had
already been significantly affected by the implementation in 2020 of Section 24, commonly known
as the ‘Landlord Tax’ or ‘Tenant Tax’, which removed the right for landlords to deduct the majority of
their finance costs, including mortgage interest and arrangement fees, from their rental income
before calculating their tax liability – requiring them to pay tax on the gross income from a rental
property, squeezing profitability and potentially pushing them up into a higher tax bracket. More
recently on 1st April 2025, higher rates of Capital Gains Tax were introduced, alongside increases to
the Stamp Duty surcharge.
Impending regulatory changes are also creating an increasingly complex environment for landlords.
The Renters’ Rights Bill, which is expected to become law later this year or in 2026, will significantly
reform England’s private rented sector
1 . The legislation introduces greater protection for tenants,
primarily by abolishing Section 21 ‘no fault’ evictions and requires landlords to cite specific, legally
defined grounds for possession.
Amid a wider push for more sustainable housing, significant changes to Energy Performance
Certificate (EPC) requirements for privately rented properties are also on the horizon. While plans to
introduce new EPC rules for rented properties in 2025 and 2028 were scrapped, a 2030 target is
currently being considered.
Together, these financial and regulatory developments are making the BTL space more challenging
and are influencing landlords’ long-term investment strategies.
A changing landscape – and new opportunities
Despite these challenges, the BTL space remains active. Q4 2024 saw 52,648 new BTL loans
advanced in the UK – up 39.2% by number compared with the same quarter in the previous year,
worth a total of £9.6 billion
2.
Over the past decade, landlords have increasingly shifted to operate via limited companies for tax
efficiency, particularly post-Section 24. 2024 saw a record number of new limited companies being
set up to hold BTL property, up 23% from 2023 – which had itself been a record year
3 . The number of
new incorporations has risen every year over the last decade, with growth super-charging from 2018
as the so-called ‘Landlord Tax’ kicked in.
We are also starting to see a new generation of landlords in the UK. While the median age of private
landlords remains around 59, there are signs of a growing shift: in 2024, 22% of new BTL mortgages
were taken out by landlords aged 18-34, up from 15% in 2014
4 , while a recent study found that a
third of UK adults aspire to become BTL landlords in the future
5 .
A number of emerging trends are also creating new opportunities in the private rental sector. Higher
living costs and rent increases have pushed more tenants towards shared living solutions, resulting
in rising demand for Houses in Multiple Occupation (HMOs) – which can offer landlords higher rental
yields than traditional BTL properties.
Meanwhile, as momentum builds around the need for more energy-efficient properties, savvy
landlords are exploring developer incentives on new builds, which already meet requirements for
the government’s forthcoming EPC reforms. This is something we’ve seen at Kensington since the
introduction of our BTL Prime range, and some Mortgage broker firms highly active in New Build are
reporting 1 in 4 New Build applications are now for BTL, meaning first time buyers are potentially
competing with landlords for new properties.
Future outlook
The UK’s BTL market is evolving, but it is not disappearing. while many Brits aspire to home ownership,
many are currently not in a position to make that a reality and are instead turning to the rental market. In
2000, 10% of the population privately rented, while 19.5% were in social housing. Fast forward to
2025, and 18% of Brits now privately rent, while 16.4% are in social housing – meaning that renters
make up nearly 35% of the total population, an almost 5% increase since the turn of the millennium
6 .
The private rental sector is vital to the UK housing market, and while heightened costs and evolving
regulation presents challenges to landlords, there are also clear opportunities.
Even in a complex environment, professional and experienced landlords understand the value of
long-term capital growth, are responding to changing market conditions and looking at alternative
locations and property types that offer healthier yield and demand dynamics.
Throughout this shift, brokers play a crucial role in helping landlords navigate the regulatory
landscape. By providing landlords with their deep understanding of criteria, products and the needs
of their clients make them essential to landlords navigating this complex market.
1 Shelter England. (n.d.) What to expect from the Renters’ Rights Act
2 UK Finance. (2025) Buy‑to‑Let Lending quarterly insight, 2024 Q4
3 Hamptons. (2025) Record number of companies set up to hold buy-to-let property in 2024
4 Paragon Bank. (2023). The importance of supporting the next generation of landlords
5 FTAdviser. (2025). Third of UK adults aspire to be BTL landlord
6 Statista. (2024). Percentage of tenants among the population in the United Kingdom from 2006 to 2024
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