BTL ownership is shifting but demand for rentals remains – Fryers

The actual number of households in the PRS rose from 3.9 million in 2014 to 4.6 million between 2022 and 2023.

More than a third (31.8%) of first-time buyers bought property during Q4 2024, just a few months ahead of stamp duty increases in April 2025.

High deposits continue to present barriers for this group of potential homeowners, however.

As a result, underlying demand for rental accommodation continues to outpace supply in a number of UK regions. There were 12 enquiries per rental on average between January and March this year, a slight fall from 16 for the same period in 2024.

Rising costs and increased regulation means the type of landlord behind the tenancy is changing, though.

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The number of landlords holding properties through a company is on the rise. A record 74% of new buy-to-let (BTL) purchases last year were made through limited companies.

Our recent analysis of survey data from the Deposit Protection Service (DPS) showed that more than a fifth (21%) of landlords who hold property through a company plan to increase their portfolios during the next 24 months.

By contrast, the data also showed just 3% of respondents who do not use a company to own rentals are considering buying property over the next two years.

Interest rates

BTL has always been cost-sensitive – and rate movements matter. The Bank of England (BoE) has said it will adopt “a gradual and careful approach” to further cuts.

The BoE’s most recent decision to keep interest rates at 4.25% will bring some relief for landlords already facing higher operating costs and stricter affordability rules.

Landlords looking for certainty in the present rate environment also favour fixed rate products.

In response, we have worked to consistently reduce rates across our two- and five-year products this year.

House prices

Inflation remains sticky and different reports paint a varying picture of house price growth.

For example, HM Land Registry figures show UK house prices rose by 5.4% annually in February, up from 4.9% in January.

By contrast, latest data from several points to signs of a potential house price slowdown in recent months.

Strong demand for rental properties means national rental yields remain stable – though variable – across regions.

BTL remains attractive so long as interest rates are affordable, property prices remain stable, and yields remain decent.

Today’s landlord is often dealing with such complex tax, yield and geographical calculations. As a result, they must take an increasingly structured, strategic and corporate approach to their businesses.

Innovation in a changing market

Lenders are adjusting to the changing landlord by creating mortgage products that better suit their needs.

In addition to standard property mortgages, more lenders are providing loans for houses in multiple occupation (HMOs), new builds and flats above commercial premises.

They are also offering higher-fee, lower-rate products, alongside 0% and 3% fee alternatives. This reflects landlords’ demand for flexibility as they look to optimise cash flow.

There’s also growing focus on energy performance, with rates increasingly tailored to Energy Performance Certificate (EPC) ratings – something we also offer to borrowers with energy-efficient properties.

All the evidence therefore suggests continual enthusiasm for investing in BTL, with a move towards a more professionalised, structured approach from both landlord and lender.