Landlords face rising costs, unclear regulation and cautious lenders, but brokers across the UK say opportunities still exist
As the UK buy-to-let sector edges toward another policy crossroads, brokers say landlords are cautious, concerned and waiting. Steve Cox, of Fleet Mortgages, compared it to being in “suspended animation.”
This limbo affects a market that still accounts for around 20% of the UK’s total mortgage exposure, according to the Bank of England. Yet new lending tells a different story: the number of new buy-to-let loans granted halved between Q4 2022 and Q1 2024, dropping from 25,280 to 12,422, UK Finance reports.
“People that have buy-to-lets at the moment, they're fairly disappointed by the performance,” said Geoff Garrett, pictured above centre, of Henry Dannell. “There's no capital growth… it's just fundamentally a lot of hassle.” With tighter lending criteria and tougher refinancing conditions, many of his clients are seeking to exit the market entirely.
Geography matters, but so does strategy
In Scotland, the picture is more nuanced. “We're starting to see rates coming down a little bit now,” said Kessar Salimi, pictured above right, of Freedom Financial. “Some people are starting to gear back up again… taking out more finance and then using that to buy more properties.”
One driver of that strategy is tax efficiency. “At the moment, Rachel Reeves is talking about maybe adding national insurance to rents,” said Salimi. “A lot of them are going to be forced to sell,” especially those with properties in their personal names.
To counter that, Salimi pointed to growing interest in portfolio purchases, particularly where six or more properties are bought together. “You don't have to pay the second home tax if you buy six or more,” he said. “You're saving eight percent straight away on the purchase price.”
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In Dundee, Euan Stewart, pictured above left, of The Perth Mortgage Centre, sees pressure building. “If these [budget] ideas come to fruition, I expect a shift towards more professional landlords, who can absorb the increased costs and associated admin.” Still, he said, “well-managed HMOs (House in Multiple Occupation) can deliver strong yields, especially near universities.”
Legislation looms, but guidance is key
Landlords are also grappling with regulatory uncertainty. “You've got renters’ rights, MEES (Minimum Energy Efficiency Standards), EPC (Energy Performance Certificate) stuff… but none of that is cast in stone,” said Cox. “So, some landlords are a little bit apathetic because it hasn’t actually happened.”
But the impact of uncertainty is visible in the data. According to Royal Institution of Chartered Surveyors, the number of homes available to let has fallen for 11 consecutive months, with a “landlord instructions score” of –21 in June 2025, meaning more agents reported reductions than increases.
Cox sees many landlords re-evaluating their role in the sector. “I think a lot of people were actually [in buy-to-let] to enjoy capital growth, because that’s the way the market carried them, as opposed to being a landlord long term with yield.” For those landlords, upcoming legislation like renters’ rights could be the final push. “Possibly, some people will give up. They’ll say, I can’t be bothered with this. It’s too complicated, too much hassle.”
Garrett sees similar pressures. “It's just a constriction, basically, to the market,” he said. Proposed national insurance charges on rental income, alongside earlier changes to mortgage interest relief, could tip marginal landlords into loss-making territory.
Energy performance obligations remain another wildcard. “What would a spend cap be? What would the exceptions look like?” Cox said. “Some landlords will think, if it isn’t a C, I’m going to dump it.”
And there are risks for tenants, too. “Ahead of legislation dropping, landlords may raise rents while they still can,” Cox said. “Using a football analogy, it’s like transfer deadline day.”
Still buying - but smarter
Despite the drag, some landlords are using the current market as a moment to reposition. “The market is defined by a strategic, measured approach rather than the dramatic exit some predicted,” said Matthew Arena, of The Brilliant Group.
That’s not wishful thinking. While many smaller landlords are selling, others are diversifying into HMOs, holiday lets, multi-unit blocks, and semi-commercial assets.
“The new environment is driving a trend away from passive investments toward active portfolio optimisation and diversification,” Arena said. “Landlords are streamlining portfolios… while reinvesting into segments offering a mix of demand, stability, and return.”
Brokers are also evolving. “Although they can do it themselves, there's so much more information that they need to take on board now,” said Salimi. “They need to do it right first-time round.”
Arena added: “Specialist guidance on portfolio lending remains a differentiator.” Brokers who can advise on tax structure, regulation, and finance strategy are now essential to landlord success.
What will separate the landlords who survive
Despite the policy fog, Cox sees a familiar cycle playing out. “Like every other piece of legislation that’s ever landed in the mortgage industry, the market recalibrates and finds a way,” he said.
But that recalibration will come with a reshaped landscape. The English Private Landlord Survey shows that 45% of landlords own just one rental property, and that group may shrink as regulation intensifies.
“It was almost, to coin a phrase, ‘a magic money tree’,” said Garrett. “But that has completely changed.”
Now, success will depend on adaptability, diversification, and informed decision-making. “Future-proofing for yield, regulation, and sustainability requirements will be essential,” Arena concluded.
For brokers and landlords alike, the message is clear: the age of passive returns is over. What comes next will favour the prepared.
