The Current State of Play in the BTL Market - and the Outlook for 2025

Reflecting on Where We Are

To start with, we asked our respondents to reflect on their BTL portfolios, and the state of the UK property market. Promisingly, the results showed that younger investors haven’t been swayed by all the bleak news headlines. Perhaps they recognise that investing is a long-term commitment, and that they have many years ahead of them to weather the storm.

In 2024, 75% of respondents aged 18-24 increased their portfolio size, compared to 35% across all age ranges, and 12% for those aged 55+. Also, despite its sky-high costs, Greater London still drew plenty of expansion last year. Nealy half (46%) of surveyed landlords here increased their portfolio sizes. The only other region to see more than this was the West Midlands (50%).

Looking ahead, the young are likely to continue to push this growth. Over the next 12 months, 41.67% of 18-to-24-year-old landlords will increase their portfolios further, rising to 51.06% for those aged 25-34. For those aged 55+, it’s only 4%.

Also, it looks like the young will be buying from the old in 2025. The majority of those looking to decrease their portfolio size are middle aged or older.

Our data unveiled (potential) hidden opportunities here too. In Wales, 28.57% plan to cut their portfolio size, the highest result across all regions. But, no landlord in this local market plans to expand. Elsewhere, landlords are keen to invest in the East Midlands (50%), the East of England (41.67%), Greater London (48%), and the West Midlands (45%).

Perspectives on landlords themselves from the outside also appear skewed. Often, landlords can be demonized in the press, and unfairly blamed for our housing issues. But, according to our results, the reality is quite the opposite.

The majority (61%) of our landlords kept their rents unchanged in 2024, as opposed to raising them. Some (7.5%) actually lowered what they charged their tenants. Clearly, the concept of a greedy, profiteering landlord is flawed.

For the coming year, less than half (46.5%) will increase rents this year, although the jury is out on whether this is the right decision or not. Landlords appear split on their prospects, with 43% expecting average UK rental yields to rise in 2025, and 49.5% expecting them to stay the same.

The Economic and Political Climate

While many landlords do plan (or hope) to expand in 2025, they may not do so completely comfortably. The majority (65%) of our landlords somewhat agreed, or strongly agreed that the policies announced in the Autumn Budget would have a negative impact on their property investments.

Also, 64% have decided to pause on making any new property investments due to concerns around incoming regulatory and tax changes. Again though, there are exceptions. Only a third of 18-24-year-olds have paused their plans, and confidence is surprisingly high in Wales.

There is also evidence of plenty of proactivity in the market. Few appear willing to accept higher costs if they can avoid it. Across all age ranges, 50% or more of our respondents said they planned to take specific actions to reduce their tax liabilities before the start of the new tax year.

This could include selling properties, restructuring their portfolios etc. What’s more, 70.5% believe they have a strong understanding of the current and incoming property tax laws and regulations. Let’s hope they’re right.

As we all plan ahead, there are certain points throughout the year, as well as locations, that may pose opportunities for expanding investors. For instance, 58% of our landlords plan to diversify their portfolio (e.g. investing in different regions or property types) in the next 12 months. This rises to 70% in London, and 80% in the West Midlands specifically.

Meanwhile, 62% are waiting for further interest rate cuts from the Bank of England before investing in any more buy-to-let properties. It may be worth keeping an eye on the BoE’s base rate votes.

All told, it appears landlords are eager to invest as soon as it makes sense to do so. Nearly two-thirds (65.5%) have spoken to, or plan to speak with, a financial expert (such as an IFA or tax specialist) to prepare financially for the 2025/26 tax year. Also, 60% either somewhat agree, or strongly agree with the statement: “The buy-to-let market is in a much stronger position than negative stories in the media often suggest.”

The Perceived Risks

Everyone, to a certain extent, appears worried about the state of the economy, and coming legislative challenges. But what specifically keeps landlords up at night right now?

With our current market conditions in mind, we asked our respondents to select up to 3 issues that they thought would represent the biggest risks to their BTL property portfolio in 2025 – if any.

Unsurprisingly, “Renters’ ability to meet rental payments if inflation or the cost of living rises again/further” took the top spot (40.5%). Everyone is struggling, and no one can afford to see their income drop or stall.

Following this was “Domestic political or economic instability that could negatively affect the property market” (34.5%), and “Global political or economic instability that could negatively affect the property market” (28%). Tellingly, “Falling property prices or a downturn in the property market” took the bottom spot (14.5%).

The View of Our CEO

“Since Market Financial Solutions founding in 2006, we have championed an optimistic ethos in our lending practices, embracing the idea that there are always opportunities to be found in the property market. It’s great to see that many landlords are also embracing an optimistic outlook.

At the same time, it’s reassuring to see that many are not naïve to challenges that lay ahead. We cannot afford to let our guard down, or take our foot off the gas pedal.

From April, a whole new raft of tax rules come into play which property investors need to be ready for. There is also the global picture. Trump’s ongoing presidency, as well as regional conflicts will all have an impact, directly or not, on our economy.

The consensus in the press may be that all of this will have an all-encompassing negative impact on the rental market. Thankfully, our results show that landlords know there is more nuance here. Moreover, they reiterate the point that the property market isn’t holistic.

Our market is segmented, and different parts of the UK, alongside various sub-sectors, offer their pros and cons. Yes, some landlords approaching their retirement years may be tempted to sell-up in the face of our looming challenges. But it seems there is an eager new generation of investors willing to take their place. Costs may be too high for some in South-East England, but there could be untapped potential in the North and Wales.

We, at Market Financial Solutions, have big plans to support those entrepreneurial investors to even greater lengths in 2025. We’ve started the year with over 50 promotions to better support our brokers and borrowers, while also cutting rates across our bridging, BTL, and fusion rates.

We’ve joined more lender panels, opening up our products to an increasing number of brokers, and our loan book recently reached £2.4bn, and we hope to grow it to £3.5bn by the end of the year.

Despite the discourse in the property industry, Market Financial Solutions has never been on a steadier footing. We are confident for the year ahead, and we want to hear from you today.”