The amount of change faced by landlords in London this year means that rethinking, or at least reassessing, your buy-to-let investment strategy is a must-do. The evolution is happening fast, and you’ll need to adapt in order to make the most of the rental opportunities available.
Landlords leaving
Some landlords are choosing to leave the market completely. We’re sad to see this happening but for many, particularly accidental landlords, the regulatory burden and increased costs they face are too much to bear.
The Renters’ Rights Bill will give landlords less power and tenants more, while changes to energy efficiency obligations will require substantial investment to bring properties up to standard by 2030. All this comes on top of the taxation changes faced by landlords in recent years. It’s no surprise that buy-to-let investment has fallen to its lowest level since before the global financial crisis.
Opportunity remains
But opportunity remains for those landlords who see the benefits that the rental market continues to offer. Rental growth is slowing but still happening, with annual rental inflation in London hitting 7.7% for the 12 months to May 2025, compared to 8.4% in the 12 months to April 2025, according to the latest figures from the ONS. Landlords following a considered buy-to-let investment strategy can also take advantage of the opportunities offered as a result of those landlords who are leaving the market, allowing them to fill in the gaps to strengthen their own portfolios.
New products
New products and a wider availability of deals are also making it easier to expand portfolios as lenders seek to stimulate buy-to-let investment. June saw the buy-to-let mortgage sector hit a new high for product availability, with 4,144 deals available – the highest number since November 2011 according to figures from Moneyfactscompare. Figures from UK Finance, meanwhile, suggest that at the start of the year, the number of new buy-to-let loans was up by nearly a third (32%) compared to the same time last year.
Lower borrowing costs
Increased product availability is also accompanied by a drop in borrowing costs with the average two-year fixed rate for buy-to-let mortgages falling below 5% as a range of lenders, including Barclays, announced rates cuts in July. Two- and five-year fixed rates have declined for four consecutive months, with the five-year average at its lowest since October 2024.
Consistent demand
Demand also remains consistent, although in London supply and demand are the most balanced, according to Rightmove’s last quarterly Rental Trends Tracker. However, each London property still receives an average of eight applications from prospective tenants and delivers an average yield of 5.7%. Meanwhile, figures from Fleet Mortgage’s latest Rental Barometer for Q2 2025 suggest that Greater London remains the highest-value rental region with average month rents of £2,328.
Incentives are required
Adam Miller, managing director at Living in London, says: “We can’t deny it’s a challenging market for landlords and hope that the government is beginning to realise the consequences of its actions. They need to offer support with incentives that encourage landlords to stay in the sector and maintain or expand their portfolios rather than measures that push them out.”
“We see strong demand in SE16, the area that we serve. We are letting properties in record time and need even more rentals in order to meet the demand from prospective tenants. Adapting to the changing landscape is crucial, especially in London, but those who do are likely to reap the rewards.”
If you are considering your buy-to-let investment strategy, then we can help. Get in touch with our team for expert advice on how to make the most of the opportunities ahead!
welcome@living-london.net
0207 231 0002
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020 7231 0002
welcome@living-london.net
