Buy-to-Let Investment Back in Business as Lending Surges 39%
UK Finance figures show buy-to-let investment recovered strongly in the first quarter of 2025, with landlords taking out 58,347 new loans worth £10.5bn. That represents a 46.8% rise in value and a 38.6% rise in number compared with Q1 2024.
Lower mortgage rates were a major factor. The average rate on new buy-to-let loans was 10 basis points below the final quarter of 2024 and 41 basis points below Q1 2024. Rental cover also improved: the average interest cover ratio, which lenders use to test affordability and typically require to be at least 125%, reached 202%, up from 190% a year earlier, leaving landlords with more income after mortgage costs.
Separate research from Paragon Bank found average rental yields reached a 14-year high of 7.11% in May. Wales led with 8.43%, followed by Yorkshire and the Humber at 7.97% and the North of England as a whole at 7.94%. These areas have also seen stronger capital growth than much of the South, including London.
The article notes that demand continues to outstrip supply in both sales and lettings, supporting prices and rents, and that landlords are increasingly prioritising steady rental income over short-term capital gains.
Tony Hall of Saffron for Intermediaries reports that landlords are re-engaging as lenders price more competitively and new lenders enter the limited company market. Zoopla’s Richard Donnell believes the decade-long landlord sell-off driven by tax changes and higher borrowing costs is drawing to a close, with future demand likely to focus on the quality of cashflow rather than house price growth.
Source: Property Investor Show, original article (19 August 2025)
