Buy-to-Let in 2025 – Our Thoughts

In 2025, the perception throughout was that landlords faced a particularly tough year. Costs continued to rise, and tougher legislation was introduced.

Yet, despite all the alarmism in the press, the BTL market has fared surprisingly well this year and many landlords who persevered likely did very well as a result.

Let’s finish this year by taking a look back at some of the BTL market’s biggest developments. In no particular order…

The Renters’ Rights Act finally arrives

The Renters’ Rights Bill loomed over the BTL market ever since it was first introduced in mid-2024. But this year finally brought closure.

In October, the Renters’ Rights Bill received Royal Assent, and officially became law[1]. While many in the rental scene dreaded the bill, others were likely relieved that they finally received clarity.

Indeed, not long after its initial introduction, we received an official date to ready ourselves for. The government confirmed the first tranche of changes will be introduced from May 1, 2026[2]. Specifically, we’ll see the end of Section 21 evictions, fixed contracts, and bidding wars.

There will inevitably be reactions to these changes both in the run up to May, and the months that follow. We’ll make sure we’re ready for however property investors plan to adapt.

A challenging Budget

The recent Autumn Budget also brought with it a few notable legislative updates specifically aimed towards landlords. There will be a 2% increase in income tax rates on property income from April 2027, with new separate “property” tax bands of 22%, 42%, and 47%[3].

Also, a new High Value Council Tax Surcharge will be levied on homes worth more than £2 million in England from April 2028, and regional mayors and local authorities have been given new powers to introduce an overnight visitor levy on short-term and holiday lets.

No one wants to see their taxes rise. Fortunately, we have some time before these new levies are introduced. We’ll have to wait and see how the market reacts.

→ See how landlords are navigating rising costs, regulation and lending in our Complete Guide to Buy-to-Let Mortgages.

Rental yields skyrocket

Fortunately, despite everything, the fundamentals of the rental market remain largely sound. The latest analysis from Zoopla showed that the average gross yield in the UK sat at 5.8% in Q3[4], and that gross yields improved across all regions over the prior year. In fact, Sunderland in Northern England produced the single highest average gross yield of 9.3%.

Also, separate research from Aldermore Bank[5] revealed landlords are achieving their strongest renal yields in more than a decade and according to Hamptons[6], average rental yields in England and Wales have grown consistently since at least 2021. With Savills forecasting rental growth every year until at least 2030[7], there may be plenty of opportunities to generate high yields over the coming years.

Landlords prove resilient

Landlords displayed admirable resilience this year. In Q1, our own independent research showed that 36% of landlords planned to expand their portfolios in 2025, and only 9% planned to reduce the number of BTL properties they owned[8]. As we approached the end of the year, separate research revealed that just over half of landlords planned to expand their portfolios as we moved into 2026[9].

This year also proved to be the year of adaptation. Likely in the face of rising tax costs, a record 33,598 BTL companies were set up in the first half of 2025[10]. This year, BTL companies became the single biggest business type in the UK[11].

As the market gets more complicated over the coming months, we’re likely to see more landlords adapt. As a reminder, Market Financial Solutions can work with limited companies, OpCo/PropCos, share purchase agreements, and more.

Perceptions are shifting

Landlords are often unfairly demonised in the press. We see endless stories of landlords taking advantage of their tenants, or abusing an unfair system. This can make them easy targets when the time comes to fill the government’s coffers.

Fortunately, the actual reality of our market started to seep through in 2025. A recent poll of renters found that 81% of tenants renting from individual landlords said they were satisfied with the service they received[12]. Furthermore, Keir Starmer went on the record this year saying “the vast majority of landlords are respectable and reasonable[13]”.

There is a sense that the establishment may be coming to terms with the fact that the economy needs landlords, and a functioning BTL market. We’ve known that since our founding in 2006 and as we approach our 20^th year of supporting property investors, we’re ready to play our part in helping landlords thrive in a challenging market.

We’ve got big plans for 2026. For brokers and borrowers who want to get ahead of everything next year is set to throw at them, Market Financial Solutions is open for business.