Buy-to-Let Lending Holds Steady in Q2 2025

The threat of an exodus of buy-to-let investors fleeing from crippling tax changes, turbulent interest rates, and tighter regulation has failed to materialise, according to the latest data from mortgage lenders.

The message from UK Finance, the trade body representing most buy-to-let mortgage lenders, is that the market is seeing business as usual with little change from a year ago.

In the second quarter of 2025, 49,590 new buy-to-let loans were advanced, worth £8.8 billion. This was down 2.6 percent by number and 0.2 percent by value compared with the same quarter last year.

However, most of the money - £6.4 billion - went to landlords remortgaging, which was 5.4 percent up on a year earlier, while new purchase mortgages dropped 11.7 percent to £2.1 billion.

Lending was down on all sectors, with £167 million spent on new build houses, a figure that is 26.4 percent down in a year. Most lending was to purpose-built flats - a total of £365 million, which was 7.7 percent less than Q2 2024. The lowest lending of £126 million was on houses in multiple occupation (HMOs).

Static mortgage rates

Average interest rates across new buy-to-let loans were 5.0 percent, just two basis points higher than in Q1 2025 and 19 basis points lower than Q2 2024.

The average gross buy-to-let rental yield was 7.26 percent, compared with 6.9 percent in Q2 2024.

The most profitable buy-to-let yields were an average of 8.49 percent in Wales, with London rating 7.8 percent and England 7.1 percent.

Property investors hold 1.47 million fixed-rate loans, a 5.5 percent increase on 12 months earlier, while landlords are paying down 463,000 variable-rate mortgages.

Buy-to-let companies borrowed £1.66 billion, an 11.7 percent year-on-year increase, while individual borrowing amounted to £7.1 billion, a slight 2.5 percent decrease on Q2 2024.

Rush to incorporate

Separately, Companies House reports that property investors incorporated a record 33,598 companies in the first six months of 2025

UK Finance also revealed 11,270 landlords owe arrears of more than 2.5 percent of their outstanding borrowing - down by 570 from Q1 2025, although 790 buy-to-let homes were repossessed in Q2 2025, which was an 11.7 percent rise on Q2 2024.

The report profiled landlords - lending was 6.7 percent up at £6.4 billion to landlords with one to three letting properties. Portfolio landlords - those with more than four buy-to-lets - were advanced £2.4 billion, a drop of 14.7 percent in a year.