Being a landlord in the UK has been portrayed negatively in the media in recent years, but is the situation really as bad as it’s made out to be? After all, despite some major changes, landlords continue to grow their portfolios and make a profit. Owning rental property in the UK has historically been seen as one of the most secure and lucrative investment strategies, and for good reason. Landlords have been able to weather many storms over the years, and it seems that recent policy changes aren’t creating the mass exodus from the industry that the media would have you believe. In fact, as you’ll see in this guide, there have been many positive changes that are attracting and encouraging landlords, not least of which is the record-breaking rental income increases we continue to see. In this guide, we’ll have a look at what’s changed for the worse and what’s changed for the better, so you can decide if But To Let is for you in 2025.
What is Buy To Let?
If you’re reading this guide, you likely have some knowledge of Buy To Let (BTL). But as a brief refresher, BTL is a property investment strategy where you purchase a property with the intention of renting it out to tenants. The goal is to generate profit from rental income, capital growth, or both.
In other words, some landlords buy a property with a high yield, where the rental income produces a decent profit even after the mortgage payments and expenses have been accounted for. Other landlords buy a property that is likely to increase in value and ensure the rental income at least covers the mortgage payments and expenses, with the aim to generate a decent profit by selling the asset in the future. In reality, most landlords try to produce both of these outcomes – profiting from rental income and capital growth.
To learn about how BTL mortgages work, please read our guide, ‘How Do Buy To Let Mortgages Work?’
What’s Changed for The Worse for Buy To Let in the UK?
There have been some changes in the UK over recent years that can be seen as negatives for landlords. However, as you’ll see in the next section, these negatives shouldn’t necessarily put you off from benefiting from BTL investing. Let’s have a look at what’s changed for the worse for landlords in the UK.
Tax Relief on Mortgage Payments
For many years, landlords were able to deduct mortgage interest payments from their taxable income. This effectively gave basic-rate taxpayers 20% tax relief and higher-rate taxpayers 40% tax relief on their mortgage payments. This was phased out and replaced by a flat-rate 20% tax credit. Basic-rate taxpayers were unaffected by the change but higher-rate and additional-rate taxpayers had to adjust to a higher tax bill. However, the new system has been in place since 2020, so as of the time of writing, many landlords have been successfully profiting from BTL under the new system for around four years.
5% Stamp Duty Surcharge
A more recent change is the increased Stamp Duty surcharge for landlords, which rose from 3% to 5% in the Autumn Budget of 2024. There’s no obvious way around this charge but it only affects those looking to buy a new investment property.
‘No-fault’ Evictions Banned
Landlords have been able to evict tenants without giving a reason under Section 21 of the Housing Act 1988. However, Labour announced in 2024 that this will change and landlords will have to give a valid reason to evict a tenant. Exactly when the new rules will come into force is unknown, but landlords can prepare by working with a trusted lettings agent when finding tenants. With the right tenants and contracts in place, you should be able to minimise any risk posed by this upcoming change. Properly vetting tenants will become even more important, and should include references from employers and previous landlords, and credit checks. Our property team at Michael Usher Sales & Lettings provide a tenant-finding service that includes a thorough vetting process for your peace of mind.
Reported Health Hazards Must Be Fixed
Awaab’s Law legally requires landlords to investigate and fix reported health hazards within a specific timeframe. Hazards must be investigated within 14 days of being notified by the tenants, with a written report detailing the issue. They should also explain the next steps and timeframe for fixing it. Repairs need to be started within 7 days for any hazard that poses an immediate health risk, and emergency repairs need to be carried out within 24 hours. All other repairs need to be completed within a ‘reasonable time’. We believe this is a positive step for the industry, as tenant’s health and safety should be of paramount importance to every landlord. However, many landlords struggle to keep up with their commitments, which can lead to legal issues. Using a trusted local lettings agent means you can enjoy your investment without having to worry about running it. Our property team at Michael Usher Sales & Lettings can fully manage your property, including all maintenance and tenant communications.
What’s Changing for the Better for Buy To Let in the UK?
Despite some negative media in recent years, there have been some positive changes for landlords in the UK. This may be the reason why approximately 2.8 million landlords continue to let homes and build their portfolios. Let’s have a look at what’s changed for the better for Buy To Let in the UK.
Rental Incomes Increase at Record Pace
Average rental prices have risen considerably over recent years and at a faster rate than average house prices. Not only does this mean that rental incomes are generally higher but also rental yields. You can learn more about rental yields by reading our guide, ‘Rental Yield Explained – How Much Can You Make From a Buy To Let?’These record rent increases have helped many landlords remain profitable despite higher running costs. This trend is expected to continue in 2025 as there will still be more demand than supply in most areas.
Demand Continues to Be High
As mentioned, in most areas of the UK the demand for rental property continues to be high. Not only is this fueling the rental price increases, but it also means that there’ll be less chance of your property being vacant, which can lead to a loss of income.
Capital Gains Tax Decreases for Landlords
For landlords, Capital Gains Tax (CGT) for higher-rate taxpayers was decreased from 28% to 24% in 2024. For basic-rate taxpayers, CGT remains at 18%.
Buy To Let Mortgage Rates Expected to Fall
Mortgage rates have been volatile across the board in recent years, pushing prices up for all borrowers. However, there have been positive signs in recent months and BTL mortgage rates are expected to gradually decrease in 2025. To find out what BTL mortgage rates are available to you from across the market, you can talk to one of our friendly advisors.
House Prices Expected to Rise
After a sluggish few years for the UK property market, prices are expected to rise steadily in 2025 and the following years. This would produce capital growth for current landlords or those investing in the near future. Not only would this lead to an increase in equity but it could also make you eligible for lower loan-to-value (LTV) mortgages and therefore lower rates. Learn more about LTV by reading our guide, ‘What Does Loan-to-Value (LTV) Mean and How Does it Affect My Mortgage Rate?’
The Bottom Line
Whether Buy To Let is worth it in 2025 will depend on your financial situation and investment goals. Although nothing is guaranteed, investing in BTL property is expected to continue to generate high rental incomes through the year and beyond. At the same time, house prices are expected to rise and mortgage rates are expected to fall, which could lead to capital growth coupled with decreasing costs. Landlords will continue to be able to claim a 20% tax credit to offset some or all of their property income tax (depending on what tax band you’re in). On the downside, purchasing a rental property has become more expensive due to the Stamp Duty surcharge increasing to 5%. If you’re considering investing in rental property in 2025, our Buy To Let mortgage team are happy to help you explore your mortgage options. We also have a dedicated property team at Michael Usher Sales & Lettings who can help you buy and manage your rental property, and find and vet the right tenants.
At Michael Usher Mortgage Services, we’ve been helping people throughout Surrey, Hampshire and Berkshire for over 30 years! We’re not affiliated with any particular lender, so we can access a comprehensive range of Buy To Let mortgages from across the market to find a deal that suits your needs. We’ll guide you through the process and liaise with your lender, estate agent and solicitor to ensure your application goes as smoothly as possible, and we can also help to protect your mortgage with our FREE Insurance Service.
Talk to one of our friendly mortgage advisors for free to get going quickly. Our head office is on Frimley High Street, but we can also help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The precise amount will depend on your circumstances but will be agreed with you before proceeding.
