simplybiz. co. uk 25 one-in-three chance of another cut in 2025, with no move likely before spring 2026.
For landlords, that means mortgage pricing is unlikely to improve significantly in the short term. While that might not feel very optimistic, let’ s not forget though that mortgage rates are much lower than they were in 2022 and 2023.
GREAT STRENGTH
One of the market’ s great strengths in recent years has been tenant demand – and that shows no sign of fading. According to the Office for National Statistics( ONS), average private rents rose 5.9 % in the year to July, reaching £ 1,343.
While rental growth was down slightly compared to June, rental growth remains well above the long-run average, especially in major cities where supply is tight.
Yields remain attractive, too. According to UK Finance, the average gross buy to let yield in Q1 was 6.94 %, up from 6.88 % a year earlier.
Both rents and yields are central to profitability, and here the trend has been encouraging. In Q2, 87 % of landlords reported making a profit, according to Paragon Bank – the highest level in nearly five years. Two years ago, that figure was just 77 %.
With average buy to let rates now well south of 5 % – a key profitability threshold, according to Hamptons – the majority of investors are comfortably in the black.
This resilience, despite higher finance costs, a flat economy and increasing regulation, is a notable success story for the sector.
A key factor behind sustained profitability is the continued growth of limited company buy to let. These vehicles have become increasingly popular since the previous Conservative government removed mortgage interest tax relief for individual landlords. By operating through a company structure, landlords can offset mortgage interest against rental income.
According to Hamptons, 60,000 new buy to let limited companies were formed last year – a 23 % increase on 2023 – bringing the total to around £ 700,000.
Unless the government undertakes a major tax overhaul, this trend looks set to continue – and perhaps even accelerate – through the remainder of the year.
Alongside incorporation, landlords are targeting higher yields from Houses in Multiple Occupation( HMOs), Multi-Unit Freehold Blocks( MUFBs) and student
One of the market’ s great strengths in recent years has been tenant demand – and that shows no sign of fading lets. The HMO market alone is worth an estimated £ 78bn and generates £ 6.3bn in annual rental income, according to HMO platform COHO.
Taken together, these trends underline the sector’ s adaptability. But the real question now is how the market will fare over the rest of the year and beyond.
In the short term, much depends on the Autumn Budget on 26th November. With a £ 40bn gap in public finances, it’ s understandable that landlords are feeling nervous, especially with reports suggesting they are in the Chancellor’ s crosshairs.
One proposal floated has been extending national insurance to rental income, potentially raising around £ 2bn a year. In practice, however, such a policy would be administratively complex and is highly unlikely to materialise.
Of greater concern is speculation around Capital Gains Tax( CGT) rates. Were rates to increase, it would impact landlords who still own property personally. For now, though, it remains just speculation – but even the possibility can weigh on confidence and slow decision-making.
LAYER OF UNCERTAINTY
The government’ s drive to improve the energy efficiency of the private rented sector is adding another layer of uncertainty. With the 2030 deadline approaching, landlords need clarity to plan and invest. Meanwhile, the Renters’ Rights Bill is progressing, strengthening tenant protections and abolishing Section 21‘ no-fault’ evictions.
Therefore, clearly, challenges remain. But the sector has repeatedly demonstrated its ability to adapt. Stability after several turbulent years is itself a positive, and the fact we can say that is proof that the market’ s foundations are solid.
This year may ultimately disappoint, but the ingredients for long term recovery are in place. Tenant demand is strong, yields remain attractive, and landlords are becoming increasingly professional.
For brokers, the message is clear: opportunities still exist. Advisers who help clients navigate incorporation, explore higher-yielding strategies, or remortgage effectively can add real value in a market that, while not booming, continues to perform steadily.
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