Written by Tony Hall, Head of Business Development, Saffron for Intermediaries
The buy-to-let market is showing clear signs of recovery in 2025, with renewed confidence from both lenders and landlords helping to bring momentum back after several challenging years. Higher borrowing costs, tighter regulation and slower house price growth had weighed on activity, but the latest figures indicate that sentiment is improving and buy-to-let is re-establishing itself as a key part of the mortgage landscape.
According to the Q1 2025 UK Finance Buy-to-Let Report, 58,347 new buy-to-let loans were advanced, worth £10.5 billion. That’s a 38.6% increase by number and 46.8% by value compared with the same quarter last year. For many, this reflects not just stabilisation, but an early-stage resurgence that could build further in the second half of the year.
Renewed confidence from stable yields and falling rates
What’s driving this turnaround is a combination of stable rental yields and more competitive lending. In Q1 2025, the average gross rental yield for new buy-to-let properties rose slightly to 6.94%, while the average interest rate on new loans fell to 4.99% – 41 basis points lower than a year earlier.
For landlords, these conditions are creating a more attractive environment to re-engage with the market. And for brokers, the return of confidence, supported by a wider choice of lenders and products, is providing a solid foundation to help clients explore new opportunities.
A more diverse investor base
Another sign of change is the evolving profile of the buy-to-let investor. Hamptons’ analysis of Companies House data shows that one in five newly formed buy-to-let companies in 2025 includes non-UK shareholders, compared with 16% in 2016. In London, the share rises to over a quarter and to just over half in prime boroughs such as Kensington & Chelsea.
This growth in limited company and expat lending structures reflects the increasingly international nature of the market, while also showing how landlords are adapting their strategies to make buy-to-let work in a new environment.
New entrants and emerging trends
We are also seeing new groups enter the market, including first-time buyers who are choosing to invest in buy-to-let before purchasing a home of their own. Many are focusing on HMOs and multi-unit freehold blocks to maximise income, highlighting strong rental demand and a willingness to explore different strategies.
While access to finance for these property types is still limited, the demand presents clear opportunities for lenders and brokers to develop solutions that meet the needs of a changing investor base.
Implications for the wider mortgage market
The resurgence of buy-to-let is already shaping the broader mortgage market. More competition between lenders is driving product innovation, and in some cases helping to bring rates lower. For brokers, this means a more dynamic set of options to work with when advising clients.
On the rental side, trends remain mixed. While average rents across Great Britain dipped slightly by 0.2% in July 2025 — the first annual decline since 2020 — the average rent is still 34% higher than five years ago. This suggests affordability pressures remain, even as some tenants see modest relief.
Looking ahead
Overall, the first quarter of 2025 suggests the buy-to-let sector is stabilising and starting to build momentum once again. If inflation continues to ease and base rates move lower later in the year, the outlook for landlords and brokers will strengthen further.
For lenders, the challenge will be to continue supporting innovation while keeping the market sustainable. For brokers, there is an opportunity to play a central role in guiding landlords – whether seasoned investors, international buyers, or first-time entrants – through an evolving market.
Buy-to-let remains an essential part of UK housing supply, and the signs are encouraging that it is moving into a period of renewed confidence and opportunity.
Tony Hall is Head of Business Development, at Saffron for Intermediaries
