The Buy-to-let (BTL) market is evolving amid shifting interest rates, regulatory changes, and affordability pressures. While rising costs, tax reforms, and EPC requirements have tested landlords, opportunities remain as the market stabilises.
With inflation cooling and the possibility of further Bank of England rate cuts expected through 2025, affordability pressures may ease, though lenders remain cautious with stringent stress testing. Portfolio landlords continue to dominate, leveraging limited company structures, while smaller investors reassess their positions.
High rental demand is driving interest in HMOs and semi-commercial assets, with specialist lenders responding through flexible criteria, higher LTVs, and green mortgage incentives. As 2025 moves forward, BTL remains viable for those who can navigate financing and regulatory shifts, with specialist lending and expert advice key to maximising opportunities.
To discuss this, I am joined by industry experts Andrew Ferguson, Managing Director of Buy-to-let at West One, Caroline Mirakian, Sales, and Marketing Director at United Trust Bank and Raheel Butt, Head of Underwriting – BTL at MT Finance.
The Panel
David Coleman, Head of Sales at Positive Lending
Andrew Ferguson, Managing Director of Buy-to-let at West One
Caroline Mirakian, Sales, and Marketing Director at United Trust Bank
Raheel Butt, Head of Underwriting – BTL at MT Finance
DC – What’s your outlook for the Buy-to-let market over the next 12–18 months, and where do you see the biggest opportunities for investors?
AF – Buy-to-Let has proven to be remarkably resilient, I’m very optimistic about the next 12-18 months. The recent forecast by IMLA suggested growth of 14% to £38bn in 2025, before increasing a further 11% to £42bn in 2026, and I believe this to be realistic forecast. The continued growth of the more specialist approach, and professionalisation of the sector is a recurring theme. We are seeing more professional landlords who understand the challenges and opportunities within the market, continue to thrive. Those who have the time and inclination to understand opportunities and keep on top of the regulatory aspects are the winners here. The days of Buy-to-Let being a licence to print money have gone for the ‘dinner party landlord’, however professional landlords who take a long-term strategic approach, can still make a good return on their investment.
CM – My outlook is one of cautious optimism, as whilst it has been a tumultuous few years for landlords, the market has shown time and time again that it is resilient. The appetite for buy-to-let (BTL) overall remains robust with UK Finance predicting lending will rise above last year’s £32billion. In 2025, investors will still operate in a market where demand for property very much outweighs supply. Rightmove have quoted that last summer there were an average of 19 applications for every rental property.
We have the added benefit of a lower interest rate environment this year and there will be landlords looking to increase or improve portfolios as affordability challenges ease. Our role as lenders will be to ensure we have solutions to cater for landlords’ requirements. Simultaneously, there will be the more cautious landlord, who will seek to manage their existing debt utilising the lower interest rates available, so the importance of remaining close to your existing landlords will be paramount, as they navigate the economic conditions.
In my view, portfolio diversification is an excellent opportunity for investors to achieve higher rental yields. Investment in HMOs, multi units and semi-commercial are just some of the types of units investors should continue to explore. In fact, semi-commercial properties could potentially be on the rise due to their stamp duty exemption. I still also believe the shift towards limited company structures will remain a strategy for many investors both for tax efficiency and portfolio growth potential.
RB – I see promising signs of growth and stability. With interest rates holding steady, we are entering an exciting phase with abundant opportunities for strategic investors. The market is particularly vibrant in niche areas like social housing, and sustainable properties across thriving regional cities delivering strong rental yields. Additionally, there is growing opportunity for portfolio landlords to acquire properties that need energy efficiency improvements at competitive prices. Forward-thinking investors who conduct thorough due diligence will discover numerous avenues to build and strengthen their portfolios in what’s shaping up to be a dynamic and rewarding market environment.
DC – With ongoing EPC requirements and the push for greener homes, what more can lenders do to incentivise landlords to improve energy efficiency in their portfolios?
AF – Although the EPC implementation date has been pushed back to 2030, I think the green agenda is here to stay. The environmental benefits and the benefits to tenants are well documented. There remains the need for clarity on some key aspects of the policy, to overcome uncertainty around how rigidly the rules will be applied, and more specifically any property exemptions, and/or payment caps on improvements works for example. I am sure common sense will prevail as removing a large number of properties from the rental market is not a feasible solution, given the lack of supply out there.
Lenders need to play their part in educating clients/brokers on the requirements and move beyond “greenwashing” with product innovation and criteria that rewards those who invest in property improvement. It’s something on our agenda for sure.
CM – Although lenders are naturally supportive of landlords providing good quality, energy efficient homes I don’t think it’s up to lenders to incentivise landlords to improve the energy efficiency in their portfolios. Our role is to facilitate lending solutions which meet their needs. However, ‘Green’ mortgages which offer lower rates to landlords with more energy efficient homes have their place. I think as an industry we can work collaboratively to encourage landlords to raise standards. Homes which are more energy efficient are more desirable and should attract higher rents due to being cheaper to heat and run and be more appealing to an increasingly eco-aware market.
RB – Lenders can work on implementing tiered pricing structures or green mortgage products with favourable rates for properties with higher EPC standards. Lenders can also partner with energy efficiency specialists to provide streamlined financing for landlords with end-to-end support from assessment through implementation, removing practical barriers to action.
DC – The Renters’ Rights Bill is set to reshape the landlord-tenant dynamic, how do you anticipate this will impact lender appetite and product innovation?
MW – The Private Rented Sector is a fundamental part of UK housing market, and there is no question lenders will adapt and refine their propositions to meet market demand and any reshaping of niche markets caused by the Renters Rights Bill. E.g. student lets, foreign/adverse clients etc. I am sure that most BTL lenders are currently working through their own risk assessment of the changes, and I expect to see this feed through to product and criteria tweaks over the months ahead.
CM – The Renters’ Rights Bill will certainly represent a significant shift in the rental market, with wide-ranging implications for landlords. However, I believe good landlords will adapt and continue to succeed in the evolving landscape. The purpose of the Bill is to encourage improvements to the rental sector and give greater protection to tenants, preventing them being unfairly treated by their landlords. Although there’s some debate about the suitability of the Bill, I think there will be a period of adjustment and we will continue to listen to brokers and customers to ensure we continue to give them the support they need.
At a time when affordability and rental yields are two of the biggest challenges for landlords, we will continue to focus on what lenders do best. We’ll keep searching for, developing and providing solutions for landlords through product and criteria innovation. There is a shortage of housing for sale and rent and our appetite to lend to landlords remains strong.
JB – I believe the initial uncertainty may create caution among lenders, particularly regarding possessions and default management. However, this creates an opportunity to drive product innovation in three areas, longer-term fixed products that align with increased tenant security expectations, specialised products for professional landlords who can navigate the regulatory changes effectively, and enhanced buildings insurance and rent guarantee products. Ultimately, this legislation will accelerate the professionalisation of the sector, potentially improving risk profiles for certain borrower segments.
DC – Portfolio landlords are becoming dominant in the market; how can lenders better support smaller landlords who may be struggling with taxation and regulatory changes?
AF – The reality is that BTL is a more complex investment than it was a few years ago, and is becoming more so. Small scale landlords need support and education to ensure they meet the requirements from a regulatory aspect, as well as understanding the tax implications and what it means for their bottom line. Lenders needs to play their part in educating and supporting clients through regular communication, however in addition, borrowers should ensure they have access to a support network, typically a good broker, accountant, solicitor etc to ensure they have sufficient knowledge to navigate the market challenges.
CM – To support smaller landlords in an environment where portfolio landlords are becoming dominant, mortgage lenders can adopt a multi-faceted approach that includes financial support, education, and tailored products.
Here are some key strategies:
1. Financial Support & Product Innovations
Specialist mortgage products: Develop mortgages tailored for smaller landlords, such as lower deposit buy-to-let products, stepped interest rate deals, or flexible repayment options.
Green mortgages: Offer lower interest rates for landlords improving energy efficiency in line with EPC regulations.
Bridge-to-Let loans: Something UTB now offer, the ability to provide short-term financing solutions for landlords looking to renovate properties before refinancing to a buy-to-let mortgage.
2. Educational Support
Workshops & webinars: Provide sessions on taxation, regulation, and property management best practices, including changes in EPC requirements and Section 24 tax relief reductions.
One-on-One consultations: Offer expert-led consultations on portfolio structuring, taxation strategies, and navigating new legislation.
3. Digital & Printed Educational Materials
Mortgage affordability calculators: Provide digital tools to help smaller landlords assess the financial impact of tax changes and regulatory requirements.
Case studies & success stories: Share real-life examples of small landlords thriving despite challenges, providing practical insights.
4. Partnership & Networking Opportunities
Industry collaboration: Work with landlord associations, tax advisors, and letting agents to provide comprehensive support.
Networking events: Facilitate events where small landlords can connect with professionals, lenders, and fellow landlords to share strategies and insights.
By combining financial innovations with robust educational and advisory services, lenders can empower smaller landlords to navigate taxation and regulatory challenges effectively, ensuring they remain competitive in the evolving market..
RB – Lenders need to create specialised support for smaller landlords with tailored advice, simplified product offerings and flexible underwriting criteria that recognise the unique circumstances of smaller portfolios is essential to help small landlords optimise their existing properties and financing arrangements.
DC – Are you seeing a shift in borrower appetite towards alternative property types, such as short-term lets, multi-unit blocks, or student accommodation?
AF – Yes, there has been a shift over recent years to property types that provide higher income and yields. HMO’s and MUBS are now far more in demand and can significantly improve yields. Clearly these property types do take more time, effort and experience of landlords and hence its typically professional landlords who have this as part of their strategy. There has been growth in the short-term let market as landlords seek the flexibility and, in many cases, the increased revenue they can drive through this approach. Location and rental demand remain key for landlord’s whatever asset type they choose.
CM – Yes, we are certainly seeing a shift in borrower appetite towards more unusual property types including non-traditional construction and those near commercial. These property types can deliver higher rental yields and at UTB we’re happy to support landlords looking to include more unusual properties in their portfolios.
RB – Yes, we are seeing significant shifts toward diversification. Purpose-built HMOs and multi-unit blocks are attracting experienced landlords seeking stronger yields in competitive urban markets. The key trend is strategic diversification based on location-specific opportunities rather than wholesale market shifts.
DC – Finishing on a positive note, what are five pros of the BTL market?
AF – Investment portfolio diversification, pension supplement through regular income, tangible asset that is more than a bit of paper, leverage opportunity meaning borrowers can benefit on capital appreciation over the longer term on full property value, good quality landlords provide a crucial service to the UK population and the housing shortage/ affordability challenges, whilst making some profit if they do it well.
CM – 1. There is still a strong demand for rental properties and a lack of supply
2. Potential for capital appreciation – property values have historically risen long term
3. Regular passive income – steady cash flow which can offer an alternative income for retirement planning for suitable investors
4. Tax benefits and mortgage interest relief – deductible expenses for things such as maintenance and mortgage interest relief for properties held in a Ltd Co. Smart structuring can increase profitability
5. Diverse investment opportunities – student lets, HMOs, short term lets, near commercial etc. Investors can tailor their portfolios to suit their risk tolerance
RB – The market has seen strong long-term investment potential, steady rental income stream, hedge against inflation, tangible asset ownership, resilience.
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