Experts Assess the Impact of the Budget on the Landlord Community
Buy-to-Let Landlords Show Signs of Recovery Following Autumn Budget 2024
The buy-to-let (BTL) sector is experiencing a mixed but gradually improving trend, with a cautious return of landlords balancing against ongoing pressures that are causing some to exit the market.
Following the Autumn Budget 2024, there has been a strong resurgence in BTL lending. In Q1 2025, there was a 39% increase in BTL loans taken out compared to Q1 2024, with £10.5 billion worth of loans, marking the strongest revival since late 2022. This surge is driven by falling interest rates (average around 4.99%) and a focus on positive cash flow rather than capital gains. New lenders entering the limited company BTL market are also supporting this revival.
Landlords are shifting their investment strategy, prioritizing stable rental yields and cashflow over house price appreciation due to the current economic environment and a tightening rental market with strong tenant demand and low availability.
However, the number of BTL mortgages overall has declined by 5.6% since early 2022, reflecting a faster rate of landlords selling properties than buying. Analysis shows that in 2024, about 5.4 properties were sold out of the rental market for every one bought by landlords, indicating many small individual landlords are exiting in response to tax increases (like the second SDLT hike) and capital gains tax pressures introduced or sustained by the Autumn 2024 Budget.
Despite these trends, the private rented sector (PRS) stock is shrinking primarily due to sustained sales by small landlords and conversion to owner-occupation, partially offset by growth in institutional Build to Rent developments. Rental yields were calculated around 6.9% in early 2025, slightly up from the previous year, contributing to landlord interest, though rent inflation is reportedly slowing, reflecting a complex rental market outlook.
Serious arrears on BTL mortgages increased slightly along with a 28.6% rise in repossessions compared to the previous year, signalling some financial stress among landlords but also supporting the wider market cleanup of less viable investments.
In summary, the Autumn Budget 2024 has coincided with a pivotal moment where buy-to-let landlords are divided: some are leaving the sector due to tax and regulatory pressures and concerns about profitability, while others are returning or expanding portfolios driven by improved borrowing conditions and stable rental demand. The sector is shifting toward those landlords focused on long-term rental cashflow and quality over rapid capital appreciation, with institutional investors and Build to Rent developments playing an increasing role.
Four more regions have experienced a reduction in tenanted for sale stock in the last two weeks: East Midlands (1.4% increase) and West (0.8% increase). The buy-to-let landscape is expected to remain positive following the Autumn Budget.
Ed Phillips, CEO of Lomond, a group of leading Lettings and Sales Agents across the UK, states that the exodus of buy-to-let landlords has been overstated. Despite the Autumn Budget revealing a hike in capital gains tax, causing initial fears among landlords that they would exit the sector, the increase does not apply to residential property. Contrary to initial fears, the Midlands has not seen a reduction in tenanted for sale stock. In the two weeks following the Budget, there was a marginal decline of -0.6% in the number of properties listed for sale across England with a tenant in situ.
The rental sector is still seen as a secure and consistent avenue of investment by the majority of landlords, despite the government's efforts to reduce profitability. The reduction in rental stock listings climbs as high as 3% in the East of England. Second homebuyers and buy-to-let investors were hit with a 2% increase in stamp duty costs when buying. The research was conducted by Lomond, analysing current properties listed for sale with a tenant in situ and comparing this level of for sale stock with the level before the Budget. No new information about the impact of the Grey Belt 'golden rules' was provided in this paragraph. No new information about the campaign to help food banks this Christmas was provided in this paragraph.
Investors in the real-estate sector, specifically buy-to-let landlords, are experiencing a resurgence following the Autumn Budget 2024, with a significant increase in borrowing for properties, as evidenced by a 39% increase in BTL loans in Q1 2025 compared to the previous year. This shift in business finance strategy is driven by improved borrowing conditions and a focus on positive cash flow rather than capital gains.
Despite some landlords exiting the market due to tax increases and capital gains tax pressures, the private rented sector (PRS) continues to be viewed as a secure and consistent avenue for investing in the finance and real-estate industries, with rental yields slightly up from the previous year and institutional Build to Rent developments contributing to growth in the sector.
