The buy to let market has witnessed significant developments throughout 2024, marked by fluctuating mortgage rates and upcoming regulatory changes.
As we approach 2025, the landscape continues evolving, presenting both challenges and opportunities for property investors. Here, we look back at this year and share some thoughts on what we can expect from the buy to let market next year.
Mortgage Rates and Economic Indicators
The Bank of England Base Rate (BBR) has shown a promising downward trend, moving from 5.25% at the start of 2024 to 4.75% (at the time of writing). Similarly, 5-year SWAP rates have shifted marginally from 4% to 3.9%. While tracker rate mortgages have benefited from this reduction, fixed rates have barely changed.
Mid-year, SWAP rates moved downward, sitting around 3.5%, before moving back up before the Autumn Statement despite several reductions in BBR. This has left many landlords wondering, what will happen next?
The good news is that we do expect BBR and fixed rates to continue easing in 2025, but not necessarily at the pace we expected before the Autumn Statement.
Key Market Statistics: Past, Present and Future
Landlord Sentiment and Market Confidence
With the prospect of higher-than-expected mortgage rates and the Renters Rights Bill, how are landlords feeling about 2025?
According to The Mortgage Works’ Buy to Let Barometer, landlords maintain a positive outlook despite market challenges:
• 36% of landlords are feeling positive about rental yields
• 32% feel confident about their own lettings business
• 14% are optimistic about prospects for capital gains tax
Regulatory Changes: The Renters’ Rights Bill
A significant development for 2025 is the implementation of the Renters’ Rights Bill, expected to come into force next summer. While a huge amount of detail is still to be determined, the Bill will bring substantial changes to landlord-tenant relationships.
We recently hosted a webinar offering insights from a legal specialist, buy to let lender, and insurance expert to discuss how this legislation will impact landlords, and how you can prepare. You can watch this here.
Looking Ahead: 2025, What to Expect
There is no doubt that there are headwinds and that some landlords are choosing to throw in the towel. But, despite current challenges, there is no escaping that buy to let properties will offer a greater return than they did this year and the year before.
The sector shows promising indicators for 2025:
• Increased rental demand against reduced supply will continue to put upward pressure on rents, making BTL a more attractive investment vehicle
• Investors are becoming more strategic in their approach with a growing interest in refurbishment and conversion projects
• A rise in the number of landlords considering share purchase transactions to mitigate the increased stamp duty burden
• Expected continued easing of BBR and fixed rates
While some landlords may exit the market, those remaining show resilience and adaptability to changing market conditions by focusing on property selection and optimising existing portfolios. This suggests a transformation rather than a decline in the buy to let sector.
The overarching sense from landlords is that they are frustrated and concerned but not put off about getting on with their job.
Speak to an Expert
If you’d like to ensure all your properties are maximising their potential in terms of income generation and cost-saving, it is worth considering working with an expert broker like MFB. We can answer any questions you have regarding your properties, help you secure the best mortgage deals, or investigate other funding options to support expanding your investments.
Speak to one of our experts here.
Mortgage Finance Brokers (MFB) is a mortgage broker specialising in buy to let finance, homebuyer and commercial mortgages, and short-term finance. Registered office 17 Kings Hill Avenue, Kings Hill, West Malling, ME19 4UA. Company registered in England and Wales No. 2502713. Mortgage Finance Brokers Limited is authorised and regulated by the Financial Conduct Authority (313537) to transact regulated mortgages.
