This year has brought significant change and development to the buy to let sector, marked by fluctuating mortgage rates and announcements of regulatory changes that will reshape how landlords operate. Let’s recap 2024 and look ahead to a brighter new year.
As we approach 2025, the buy to let landscape continues evolving, presenting both challenges and opportunities for property investors. So, what can we expect from the buy to let market next year?
Mortgage Rates and Economic Indicators
The Bank of England Base Rate (BBR) has continued on 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’s 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 pre-Autumn Statement. Unfortunately, pricing will always go up much quicker than it comes back down.
Key Market Statistics: Past, Present and Future
|
|
January 2024 |
Currently |
2025 Expected |
|
Bank of England Base Rate |
5.25% |
4.75% |
4% |
|
Average UK Property Prices |
£281,913 |
£292,000 (+2.9%) |
+4.2% |
|
Average UK Rents |
£1,202pcm |
£1,307pcm (+8.7%) |
+5% |
Landlord Sentiment and Market Confidence
So, with the prospect of higher-than-expected mortgage rates and the Renters’ Rights Bill, how are landlords feeling going into 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 in 2025 is the Renters' Rights Bill, which is expected to come into force next summer. While much detail remains to be determined, the Bill will substantially change 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 to come, and some landlords are considering whether buy to let is still a worthy investment. But, despite these challenges, there is no escaping that buy to let properties will offer a greater return in 2025 than they did in both 2024 and 2024.
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
- There is 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, giving landlords more competitive mortgage options
While a small number of landlords may exit the market, landlords continue to be resilient. Adaptability to changing market conditions by focusing on property selection and optimising existing portfolios is the landlord strategy for 2025. Instead of a decline in the buy to let sector, we’re going to see a transformation in how we work.
Speak to an expert
Get your property portfolio in order before 2025. Speak to one of our expert mortgage brokers to see how we can help you maximise your property investments and discuss any property finance plans you have. Call us on 0345 345 6788 or submit an enquiry here.
