BTL market is now valued at £20.5 billion, up 12% from £18.3 billion in 2023
The following article was written in association with ModaMortgages.
The buy-to-let (BTL) investment market is big business – but it’s certainly not without its challenges. Ever-changing economic conditions, regulatory updates and shifting renter preferences mean the market has experienced a turbulent few years.
Now, however, the BTL sector seems to be bouncing back. Research from Finder found that, as of the close of 2024, there were 4.7 million buy-to-let properties being rented in the UK – or one in five households. This market is now valued at £20.5 billion, up 12% from £18.3 billion in 2023, with certain cities or towns naturally more suited to the sector – notably areas with universities, lower house prices and steadily increasing rent1.
Speaking to Mortgage Introducer, Becki Fraser-Tucker, senior business development manager at ModaMortgages, said she had noticed an increase in landlords becoming more interested in Northern locations – even if they themselves were based elsewhere.
“In Manchester, high quality flats are more attractive due to the Energy Performance Certificate (EPC) proposals combined with the Renters’ Reform Bill still being debated in Parliament,” she said. “As such, high quality apartments feel like a better longer-term investment for some landlords. On the other hand, we’re also seeing a lot of landlords from the South buying in the North East because property prices are low and rental yields are much higher. We’re seeing a lot more first-time buyers and first-time landlords buying in these areas as a result of this.”
North East dominates BTL market
And the data certainly seems to chime with Fraser-Tucker’s market assessments. Research from Magnate Assets found that the North East is the top spot in the whole of England for BTLs, enjoying a 9.2% average rental yield - followed by the North West at 8.4%2. What’s more, the average property price in the North East remains at £161,3893, while rent has risen by 8.7% over the past year4.
In Manchester, Fraser-Tucker says there’s been an increased interest around new build, high quality apartments for prospective landlords – while in the North East, single family dwellings remain a firm favourite.
“There’s also been an increase in houses in multiple occupation (HMO) conversions across the country where landlords are looking at increased yields from shared accommodation and moving into guaranteed rental agreements with housing associations,” she told Mortgage Introducer.
High rental yields such as the ones seen in the North East coupled with attractive house prices are key drivers of the BTL investment space – but they’re not the only reasons. Other factors such as regeneration projects, infrastructure and tenant demand are influencing investor decisions.
“An increase in the guaranteed rental market with fixed tenancy agreements for three, five and seven years is driving interest in BTL too,” added Fraser-Tucker. “They’re becoming increasingly popular because the property maintenance is all taken care of, the property is fully managed and it’s returned in its original state at the end of the term.
“There’s also been more of a shift in the types of properties that landlords are moving towards, such as better quality properties for longer term investment and which protect against the future EPC requirements or larger properties that can be converted into HMOs and shared accommodation for increased yields.”
Looking at what the future holds for the BTL market and things seem optimistic. Research from the Office for National Statistics found that UK rents are rising, up 7.7% in the 12 months to March of this year, with the average rent in England sitting at a steady £1,3865. Furthermore, data from London-based estate agent Benham & Reeves found that 84% of landlords are determined to remain within the BTL sector this year – with 4% actually planning on increasing their portfolio6.
However, with impending changes on the horizon, such as the EPC rules and the Renters’ Rights Bill, the BTL sector is not out of the woods just yet, so support from lenders is essential for any existing or prospective landlord. Reach out to the dedicated team at ModaMortgages from Chetwood Bank – they’re making BTL smarter, faster and simpler.
ModaMortgages
ModaMortgages is the home of ‘smarter, faster, simpler’ buy to let mortgages, making it easier for brokers and landlords. It will lend to small or large portfolio landlords, limited companies, individuals, first-time buyers and first-time landlords. It is part of Chetwood Bank, the UK-based digital challenger bank.
Chetwood Bank and ModaMortgages are trading names of Chetwood Financial Limited, company number 09964966. Chetwood Financial Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, under registration number 740551. Authorisation can be checked on the Financial Services Register at www.fca.org.uk. We’re also registered with the Information Commissioner’s Office under registration ZA218401 and we’re a member of CIFAS, the UK’s leading fraud prevention service. Chetwood Financial Limited is registered in England and Wales and our offices are at Ellice Way, Wrexham Technology Park, Wrexham, LL13 7YT. CHL Mortgages is a trading name of Capital Home Loans Limited, used under licence by CHL Mortgages for Intermediaries Limited. Registered office: Admiral House, Harlington Way, Fleet, Hampshire, United Kingdom, GU51 4YA (Company No 12954007).Visit https://modamortgages.co.uk/ to learn more.
