After a challenging period for landlords and investors, the UK buy-to-let market is showing strong signs of recovery. The latest figures from UK Finance reveal a surge in activity during Q1 2025, with buy-to-let mortgage lending up significantly year-on-year.
A total of 58,347 new buy-to-let loans were issued between January and March 2025, totalling £10.5 billion in value. That represents a 39% rise in loan volume and a 47% increase in lending value compared to the same period last year.
This growth marks the most active quarter for buy-to-let lending since the 2022 mini-budget and reflects renewed investor confidence as market conditions begin to stabilise.
Yields on the Rise
Rental yields are also moving in the right direction. The average gross yield climbed slightly to 6.94% in Q1 2025, up from 6.88% a year earlier. While the increase may seem modest, it signals steady rental demand and improving returns for landlords—especially when combined with more competitive mortgage rates.
What’s Driving the Uptick?
Industry experts attribute the recovery to a combination of market factors:
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Stamp duty changes at the end of Q1 prompted a spike in completions as landlords rushed to beat the deadline.
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Mortgage rates have become more attractive in early 2025, encouraging cautious investors back into the market.
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Supply-demand imbalance continues to support strong rental returns, especially in areas with limited rental stock.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, described Q1 as the “strongest quarter for buy-to-let activity in recent memory,” noting that the fundamentals—rising population, shifting household dynamics, and ongoing housing shortages—remain in landlords’ favour.
A Positive Outlook, With Caution
While the numbers are encouraging, challenges persist. Nathan Emerson, CEO of Propertymark, warns that rising mortgage possession rates highlight the financial pressure some landlords still face. Careful property selection, strong tenant demand, and a long-term approach remain key for investors navigating today’s market.
What This Means for Investors
At North Fox Property, we’re seeing this resurgence reflected on the ground. Investor enquiries are up, and interest in high-yield regional markets—particularly in the North East and North West—remains strong. With many properties achieving gross yields between 7% and 9%, the outlook is increasingly positive for those looking to expand or start their portfolio.
Timing will be essential over the coming months. As regulation evolves—particularly around EPC standards and rental legislation—early movers will be better placed to secure strong returns and avoid future compliance costs.
In Summary
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Buy-to-let mortgage lending rose 47% in value and 39% in volume in Q1 2025.
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Average rental yields increased to 6.94%, reflecting strong demand.
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Investor confidence is returning, driven by improved lending conditions and long-term rental trends.
If you’re considering your next investment or looking to diversify your portfolio, now is an ideal time to take advantage of the shifting landscape.
Get in touch with our team today to explore high-performing buy-to-let opportunities tailored to your goals.
