RentGuarantor Holdings (Aim: RGG) has been given a boost by the Renters' Rights Act, one of the most significant pieces of legislation to hit the UK rental market in decades. It's only been in force since the beginning of May, but the Act is already driving a complete rewriting of the market.

Under the new law, fixed-term tenancies have been abolished, “no fault” evictions are no longer allowed, rents can only be raised once a year, and during the first 12 months of the tenancy, the landlord cannot serve notice to move back into the property or sell it. These changes, far from protecting tenants, have forced landlords to become more defensive.

The changes have made it much harder for landlords to evict tenants who can't or won't pay their rent, piling pressure on a system that's already on the verge of collapse. According to professional body Propertymark, due to lengthy court backlogs, the average time from claim to repossession has risen to more than 68 weeks, compared with just over 20 weeks in 2019. At the point of eviction, average unpaid rent stands at £12,708 across England and Wales and £19,223 in London.

Landlords have responded by demanding that tenants provide a guarantor before they agree deals. According to multiple reports, around 40% of landlords now require guarantors for both new and existing tenants. This is where RentGuarantor comes into play.

How RentGuarantor works

The firm is a rare example of how effective London's capital markets can be for early-stage growth businesses. Founded in 2016 by Paul Foy, a property investor since the mid-1980s, RentGuarantor does what it says on the tin – guarantees rents. Tenants pay a fee (£20) for an initial background check and the firm uses tools such as Open Banking and AI to calculate how much the tenant can afford and if they're able to maintain payments. If the tenant passes the check, which should be completed the same day, RentGuarantor can offer the guarantee.

This incurs a further fee, usually around three to five weeks' rent, depending on the underlying risk profile. When the tenant has paid and signed, RentGuarantor provides a legally binding guarantee of rental payments to the landlord or letting agent. Unlike traditional guarantors, such as parents or grandparents, this provides an extra layer of protection for the landlord. RentGuarantor passes the risk to a panel of insurers while collecting the origination fee and remaining the key point of contact for customers.

Five years of RentGuarantor Holdings on the London market

After spending five years building the foundations, Foy and his team took the company public in 2021. It listed on the Aquis exchange in 2021 with hardly any revenue and moved to the Aim junior market in the second half of 2025. The new listing raised £4 million in 2025 to support its growth efforts and it ended the year with revenue of £2.4 million, up 87% year-on-year. The founder has remained a key shareholder with a 30% stake.

RentGuarantor hasn't charged into the market seeking break-neck growth and drawing down shareholders' goodwill to fund spending. There's a very tight grip on marketing spending, which totalled just £200,000 in 2024 and £500,000 in 2025 against revenue of £2.4 million, or around £165 per contract (based on the year-end figure of 3,123 contracts). The focus over the past five years has been on getting the offering right and putting in place the right technology and team to scale up effectively.

The firm has now reached the point where this hard work is beginning to pay off. In May, the month the Renters' Rights Act came into force, RentGuarantor recorded a 115% increase in unaudited revenue compared with the average for the first four months of the year. Moreover, revenue per contract was up 24%. The group also recorded its first positive monthly Ebitda earnings since its admission to trading – well ahead of the board's expectations.

The challenges facing RentGuarantor Holdings

The key risk for the group here will be scaling up without falling flat on its face, as so many firms do when they encounter a sudden surge in demand. The Act is driving demand for guarantees, but it'll also lead to a surge in disputes.

To help, RentGuarantor is looking to AI and has an expert on the matter in its orbit. The AI strategy is being led by Dave Cliff, a non-executive director and professor of computer science at the University of Bristol. He previously worked at MIT's artificial intelligence laboratory, so unlike many other businesses, which seem to be turning to AI with little actual understanding of the benefits, drawbacks and costs, RentGuarantor looks well-placed to exploit the benefits of the technology fully. Management estimates the group can process 20,000 contracts per year, but that will rise to 100,000 with AI's help.

According to house broker Shore Capital, RentGuarantor could agree 7,000 contracts this year, 13,000 in 2027 and 62,000 by 2030. Revenue could hit £6 million in 2026, rising to £19 million by 2028 and £54 million by 2030. Even if it achieves this lofty growth, it would still leave the group at only 3.4% of the potential total market.

Now that the firm is essentially self-funding, there's scope for marketing spending to rise. Shore Capital expects a ten times rise by 2030, easily covered by the firm's 79% gross margin. The broker has pencilled in adjusted earnings per share of 3.6p by 2028. As with all early-stage firms, these forecasts are likely to be wrong, but they illustrate the growth potential if the firm manages to scale up over the next 12 months. This is a high-risk play, but one with a huge and growing market to support it.

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The Renters’ Rights Act went live in May, ending no-fault evictions and shifting tenancies to rolling contracts.

The reforms also ban landlords from requesting more than one month of rental payment upfront.

The one month advance payment can only be paid once a tenancy agreement is signed.

This means tenants only need to pay a deposit when moving into a property and one month upfront if requested.

Before the changes, landlords could request large amounts in advance.

Requesting larger upfront rent payments was traditionally a way to reduce the risk of rent arrears, particularly when tenants failed to meet affordability criteria.

We reveal alternative ways to test tenant affordability and reduce the risk of rent arrears.

Tenant referencing

A key part of choosing a tenant is referencing.

Landlords can conduct credit checks, get employer references and assess affordability.

You can also talk to a tenant’s previous landlord to check if rent was paid on time and if the property was kept in a good condition.

Some of these checks can be done yourself but there are companies such as Goodlord and HomeLet who can do the work for you.

Nouran Moustafa, practice principal at Roxton Wealth, said: “Landlords need to stop seeing large upfront rent as the only form of security. It was never a perfect test of affordability anyway. Someone can have cash today and still be financially unstable three months later.

"The better approach is proper, evidence-led referencing, income checks, employment status, credit history, previous landlord references and whether the rent is genuinely affordable against the tenant’s wider commitments.”

Rent guarantors

Some analysts predict that landlords will become more reliant on guarantors.

This is where a family member is required to set aside funds in case a tenant fails to pay rent.

Analysis by property insurance technology firm Zero Deposit found the average renter in England is likely to fall short of standard affordability requirements of 2.5 times the annual rent.

With average rents currently standing at £1,438 per month, equivalent to £17,256 per year, tenants would typically need to earn at least £43,140 annually in order to pass affordability checks, Zero Deposit said.

However, average earnings across England currently sit at £41,859, leaving the average renter £1,281 below the required threshold.

Sam Reynolds, chief executive of Zero Deposit, said: “While the Renters’ Rights Act is designed to improve security for tenants, it also significantly changes the way landlords manage financial risk within the private rental sector. With restrictions on upfront rent payments and fewer traditional safeguards available, landlords and agents naturally place greater emphasis on affordability checks and income protection when assessing prospective tenants.

"As a result, we expect guarantors to become an increasingly common requirement for renters who fall outside standard affordability criteria, particularly younger tenants, overseas applicants, self-employed workers, and those moving to high-cost rental areas."

Rent guarantee insurance

Landlords can also protect themselves with rent guarantee insurance.

In return for a premium, this type of insurance pays out the monthly rent amount for a set period if your tenant falls into arrears.

It may also cover the legal fees associated with serving notices and legally evicting tenants.

Michelle Lawson, director of Lawson Financial, said: “Rent guarantee insurance is now a must and is a low cost way of protecting your rental income against most adversities.”

Find a good lettings agent

A lettings agent should have a book of reliable tenants that they have already reference and recommend.

Using a lettings agent can also help keep up with ever-changing rental rules and regulations to ensure you are renting your property out legally.

Lawson added: “A good letting agent will be fully referencing prospective tenants.

“Self-managing landlords will be the ones potentially sleep-walking into disaster as so many are inexperienced and rely on social media to find tenants and for advice- they need to ensure that they use reputable channels.

“There are many industry backed resources that they can call upon but a number will still cut corners which, with the Renters Rights Act and subsequent council imposed fines, could prove costly. to avoid doubt, they should now be employing the services of a good letting agents who knows the new legislation as the buck stops with the landlord regardless.”

Landlords may have only just finished preparing for the new rental reforms introduced in May but there are plenty of other deadlines to be aware of in 2026 and you could be fined up to £40,000 for failing to comply.

The buy-to-let sector has faced numerous shakeups in recent years, with extra stamp duty charges, the end of mortgage interest relief and changes to capital gains allowances.

The most recent overhaul came last month when the Renters’ Rights Act was introduced, ending no-fault evictions and making tenancies more flexible.

Landlords had until the end of May to provide tenants with an information sheet of changes.

That is just the beginning though and there are still other changes that landlords need to prepare for and failure could result in hefty fines.

Jack Malnick, managing director of property information website Landlord Resource, said: “While there isn’t another major deadline associated with the new Renters’ Rights Act that you need to consider this year, there are a lot of ongoing aims you should be taking into account each month to meet future regulations and avoid additional fines.”

Here are some of the other major rental dates and deadlines for landlords to be aware of.

23 June 2026: The Housing Health and Safety Rating System (HHSRS) changes

Updated health and safety rules mean landlords must ensure their properties are maintained to a good standard for tenants or face penalties of up to £40,000 under the new Housing, Health and Safety Rating System (HHSRS) coming into force on 23 June.

Local authorities use the HHSRS to look into potential health and safety risks in homes in England and Wales. Changes introduced under the Renters’ Rights Act are intended to make the rules easier to understand and enforce.

The current more complicated A-J rating system is being replaced, under the changes. From 23 June, any hazard discovered in a landlord’s property during a local authority inspection will be categorised as high, medium or low.

High risk hazards (known as Category One) will continue to trigger councils' duty to take action against the landlord. The council will still be able to use its discretion when it comes to dealing with medium or low risk issues (known as Category 2).

Under the updated HHSRS, the ‘risk of harm’ rating has also changed, from the existing ‘one to four’ levels to new ‘extreme, severe, serious, and moderate’ categories. Again, the bandings haven’t changed, just the descriptions.

The advice from the National Residential Landlords’ Association (NRLA) is that if landlords are complying with all current health and safety guidance under the HHSRS they don’t need to do anything differently.

“However it is vital that you continue to carry out regular inspections of your properties to make sure they are hazard free and safe for your tenants to live in,” the NRLA said.

The revised HHSRS will affect homes in England only. Wales has different regulations and will need to adopt the guidance separately, so will be using the existing HHSRS until further notice.

31 July 2026: Final court date for section 21 notices

Any section 21 notice or section eight eviction notices filed before the Renters’ Rights Act came in must hit court by this date or they will lapse.

Late 2026: Regional rollout of Private Rented Sector database

The government’s Private Rented Sector (PRS) database is due to launch later this year in the next stage of the rental reforms. It will be gradually rolled out in different regions.

Landlords will be required to register themselves, their properties, and their compliance status on an area-by-area basis.

2027: PRS database becomes mandatory

No precise date has been given but it will be mandatory for landlords to be on the PRS database at some point in 2027.

This is supposed to make it easier for tenants to identify who their landlord is.

End of 2028: New Landlord Ombudsman

By the end of 2028, it will be mandatory for landlords to be members of a new Landlord Ombudsman and to be on the PRS database before they can even list a property for rent.

Failure to register to the new PRS Database and ombudsman could lead to an up to £7,000 civil fine, or up to £40,000 repeat fine.

1 October 2030: EPC changes

Currently, landlords can only rent out a property if it has a minimum Energy Performance Certificate (EPC) rating of E.

This will rise to C from 1 October 2030, meaning landlords have four years to start looking into energy efficient measures.

2035: Decent Homes Standard

The full Decent Homes Standard will be introduced in 2035.

Under the standard, properties must be free from hazards, in a reasonable state of repair and with reasonable services such as a kitchen and bathroom and free from damp or mould.

Landlords can be fined up to £30,000 if their rental properties are found to be below the Decent Homes Standard. The HHSRS remains the statutory framework for hazard assessment under the Housing Act 2004, enforced by local authorities. The DHS complements rather than replaces the HHSRS.

Having an offer accepted on a property should clear the path to moving into a new home – but most sales collapse after buyers and sellers have already paid out thousands in costs, according to new research.

More than half of house moves (58%) fall through after an offer has been accepted, costing buyers and sellers an estimated £2,830 in direct costs such as legal fees, surveys and mortgage costs.

One in six transactions collapse after four months and one in 10 falls through after five months or more. Sometimes it is because vital information about the true condition of the property is not disclosed upfront. Other times affordability issues arise late into the process putting the house price out of reach.

With around 1.2 million residential transactions taking place each year, the total cost could be as high as £2 billion a year in wasted time and fees as people try to buy a house or sell their home.

The findings from the Open Property Data Association (OPDA), based on a survey of 5,000 recent home movers, highlight deep-rooted problems with the home‑buying process.

The data comes at a time when the economy and housing market are already under strain. Higher interest rates, tighter affordability, and longer transaction times have increased the risk of deals collapsing before completion, leaving families financially stretched and emotionally drained.

When asked how they were affected by a collapsed sale or purchase 43% cited emotional stress as the biggest impact. More than four in 10 people (41%) said their plans were significantly delayed.

The impact was felt most acutely by older home movers. Among those aged 55 and over, almost six in ten (59%) reported high levels of emotional stress.

Maria Harris, chair of the OPDA, said: “These figures lay bare a housing market that is failing consumers at every stage. Far too many transactions collapse because crucial information only comes to light weeks or even months after an offer is made. By then, buyers and sellers have already invested significant time, money and emotional energy.”

How to avoid a property chain collapsing

Harris is calling for upfront, standardised property data through digital property packs to be available to all buyers to avoid any hidden surprises that could jeopardise a home buying chain.

Phil Spencer, property expert and founder of property advice website Move iQ, added: “For buyers and sellers, these fall‑throughs often mean months of uncertainty, money lost on fees that can’t be recovered, and plans put on hold. Much of that pain could be avoided if people were given clear, reliable property information upfront.

“When buyers know what they’re committing to from the start, they can proceed with confidence, avoid nasty surprises later on, and reduce the risk of deals collapsing after so much has already been invested.”

While buyers are waiting for upfront digital property documents to become mainstream, these are the issues Ian Futcher, financial planner at Quilter warns to be aware of in the current market that could jeopardise a sale – and how to prepare for them.

1. Get an agreement in principle early

The two most common causes of chains collapsing are affordability issues – where buyers either fail to secure a mortgage or see offers revised as rates change – and survey results uncovering problems that lead to renegotiation or withdrawal.

In the current environment, Futcher said mortgage dynamics are playing a bigger role. “As rates have shifted more quickly in the UK than in some other markets, buyers can find themselves reassessing what they can afford midway through a transaction, which increases the risk of deals falling apart,” he pointed out.

“Securing a mortgage agreement in principle early in the process can provide greater certainty on borrowing capacity,” Futcher said.

2. Use a good mortgage broker

Working closely with a broker or adviser helps ensure buyers are matched with suitable products from the outset and give flexibility should cheaper deals become available in the run up to completion. Seek recommendations from friends and family who’ve had positive experiences, or use a free matchmaking service like VoucherFor or Unbiased to find a vetted mortgage broker.

3. Keep transactions moving

Futcher said: “Delays often create the conditions for second thoughts or changing circumstances, so maintaining regular communication with lenders, solicitors and agents can help keep momentum and avoid surprises emerging late in the process.”

4. Factor in changes in mortgage rates

Buyers who have factored in potential rate movements and ensured they have sufficient financial headroom are better placed to proceed, even if market conditions shift slightly before completion, said Futcher.

“In a market where uncertainty remains elevated, taking advice and stress-testing affordability upfront can make the difference between a successful completion and a collapsed chain,” he said.

Large parts of the Renters’ Rights Act have come into force and while it should improve outcomes for renters, critics argue it’s made the task of being a landlord tougher.

One of the Labour government’s flagship policies, the bill looks to shift what some perceive as the power imbalance between tenants and landlords.

But its introduction comes after years of the buy-to-let market being clobbered, with increases to the second home stamp duty surcharge and tax reliefs on mortgage interest slashed.

The changes contained within the Renters’ Rights Act, which applies primarily to the private rental market, are being phased in from 2026 onwards. A large number of changes came into effect in May 2026.

‘No fault’ evictions have been banned, renters can now ask to live with a pet and landlords cannot reasonably refuse and fixed-term tenancies have been replaced with rolling contracts.

The act will look to extend Awaab’s Law to private rentals too, although this hasn’t come into effect yet. The law, already in place for the social rented sector, means landlords have to investigate and fix serious damp mould and emergency hazards within a fixed timeframe.

While the Renters’ Rights Act will arguably improve lives for tenants, landlords already working in a challenging market need to arm themselves with as much protection as possible.

Here are four key things landlords should consider doing now.

Rent guarantee insurance

With the Renters’ Rights Act abolishing Section 21 (of the 1988 Housing Act) ‘no fault’ evictions, landlords now have to rely on section 8 to take over possession of a property.

Under Section 8, tenants can be evicted on anti-social behaviour grounds or for owing at least three months’ rent.

However, this could lead to extended periods where landlords are left significantly out of pocket and facing legal costs if a tenant disputes a case and it goes to court.

Rent guarantee insurance can protect you in this situation, covering for missed rental payments and sometimes legal costs.

Rent guarantee insurance usually pays out for between six to 12 months. How much you pay will vary depending on the type, size and location of the property, your level of cover, the excess and the insurer’s assessment on how likely it is a tenant will default on payments.

You could also ask a prospective tenant to agree to have a guarantor, who can cover any rent should the tenant be unable to pay.

Chris Norris, chief policy officer at trade body the National Residential Landlords Association (NRLA), said: “For landlords who rely on rental income to cover essential costs, a guarantor or rent guarantee insurance is a sensible option.

“With Section 8 possession routes likely to be slower and costlier, cover that pays out for unpaid rent and the legal costs of regaining possession can be the difference between a manageable setback and a serious financial hit.”

Tighten referencing and affordability checks

With fixed-term assured tenancies ditched through the Renters’ Rights Act and, alongside the banning of Section 21 evictions, it’s incumbent on landlords to do thorough affordability and referencing checks on tenants to ensure they can keep up with payments and won’t cause any problems.

As a landlord, you can carry out referencing and affordability checks yourself.

You can also get the help of a letting agent or professional tenant referencing company, just bear in mind you’ll need to pay for this.

For example, a professional referencing company can charge anywhere between £15 and £40 per tenant.

If you carry the checks out yourself, you could hold an initial phone or video call with the tenant to gauge their personality and also find out other useful information about them like what type of employment they’re in and if they smoke.

You could carry out a credit check on them, review their bank statements and ask their employer and previous landlord for a reference as well.

Sim Sekhon, group chief executive officer at Propoly, a platform for lettings agents, said: “Landlords and letting agents will need to place far greater focus on upfront due diligence, particularly around affordability, income verification, previous tenancy conduct and overall risk profiling before a tenancy begins.”

Do note, under the Renters’ Rights Act, it is now illegal for landlords to refuse to rent a property to a tenant receiving benefits or with children aged under 18.

Consider adding a pet policy to your tenancy agreement

The Renters’ Rights Act sets out that landlords cannot unreasonably refuse a tenant’s request for a pet. This part of the act came into effect in May 2026.

Therefore, it could be worth adding a pet policy to your tenancy agreement to avoid any disputes down the line.

Sián Hemming-Metcalfe, operations director at Property Inspect, a website for property managers, surveyors and landlords to manage property reports and inspections, said: “A well-drafted pet policy can help set expectations around issues such as cleaning responsibilities, flea treatment, nuisance behaviour and how any pet-related damage will be managed.”

As well as adding a pet policy to your tenancy agreement, it may be worth adding pet damage to your existing landlord insurance which would cover you in case of any accidents.

Hemming-Metcalfe added it could be worth writing out an inventory and agreeing on it with a tenant.

This will establish the condition of the property, including contents, general cleanliness, walls, floors and appliances, when they moved in and could help if a tenant disputes whether their pet has caused any damage down the line.

Start keeping detailed records and stay on top of compliance and property standards

Section 8 notices rely on strong evidence against a tenant, so it’s important landlords hold detailed records of all aspects of a tenancy which they can use to prop up a case that goes to court.

Hemming-Metcalfe said: “Maintain thorough inspection reports with photographic evidence, accurate maintenance records, rent payment histories and clear logs of tenant communication throughout the tenancy. Evidence of issues such as antisocial behaviour complaints or unresolved repair access can also become critical if matters reach court.”

Landlords must also ensure they’re keeping on top of property standards and compliance.

This includes ensuring Energy Performance Certificates (EPCs), gas safety certificates and electrical reports are valid and up to date and deposits are correctly protected through a tenancy deposit scheme. Repair issues will also need to be addressed promptly, with clear records maintained throughout.

Hemming-Metcalfe added: “Beyond avoiding fines, compliance will increasingly form part of a landlord’s ability to successfully pursue possession claims. In practice, maintaining accurate property records, inspection evidence and audit trails will become just as important as the physical management of the property itself.”

Are you a landlord affected by the Renters’ Rights Act and other recent legislative changes? If you'd like to share your story, get in touch by emailing editor@moneyweek.com.

The number of homes being bought, renovated and then sold in quick time has slumped over the last decade – but there is still money to be made if you know where to buy.

Buying low and selling at a profit is known as house ‘flipping’. The amount of properties ‘flipped’ within 12 months halved between 2016 and 2025 from 21,520 to just 10,570, according to Hamptons.

The property agent put the fall down mostly to a rise in the cost of stamp duty on second homes and sliding house prices in some regions.

As a percentage of total housing transactions, London saw the biggest drop in flips, with 2.1% of all transactions flipped in 2015, but just 0.9% in 2025.

In the East of England, this figure slumped from 2% to 1% over the same period, while in Yorkshire and the Humber, plus the South East, the drop was from 2.6% to 1.8%.

Why is the practice of flipping on the slide though, are there flipping hotspots where gains can still be made and what other options are there for property investors looking to cash in? Here’s everything you need to know.

The flipping hotspots where investors can still turn a profit

When it comes to flipping, only one UK region has bucked the downward trend over the last 10 years, according to Hamptons’ analysis – the North East.

The research shows that gross profits on flipped homes there, after deducting stamp duty costs, were up between 2015 and 2025 by 27%, from £13,450 to £17,080.

Across the region, the rise in profits was sharpest in Hartlepool, increasing by 148% between 2015 and 2025.

Post-stamp duty land tax (SDLT) profits also surged by 141% in Redcar and Cleveland, 111% in South Tyneside and 70% in Middlesbrough.

Dr Andrew Threadgold, general manager of property development firm Cornerplot Properties, based in North East England, echoed Hamptons' findings, highlighting Middlesbrough as one area which has been a flipping hotspot for a number of years. He also said South Wales had proved profitable, in particular areas such as the Valleys and Pembrokeshire where he said house prices have surged.

Credit: Hamptons and Land Registry

Why are fewer properties being flipped?

Flipping homes involves buying a property and selling it on quickly for a profit.

Typically, investors buy run-down properties then renovate them before selling up. Some investors simply buy homes at a low price then sell them immediately for profit.

Flipping was once seen as a risk worth taking. Hamptons saw the trend peak in 2007, when 3.7% of all homes sold in England and Wales (52,950 properties) had been purchased in the last 12 months.

But the introduction of the 3% stamp duty surcharge on second homes in 2016 and the increase in this surcharge to 5% in October 2024 has eaten into profits.

According to Hamptons’ research, gross profits – the difference between the original price and resale price of a home, after deducting stamp duty – have fallen significantly since 2016.

In 2015, just one year before the second home surcharge was introduced by then chancellor George Osborne, the average post-SDLT gross profit on a flipped property was £36,500. By 2025, this had fallen to £16,390.

This is before refurbishment costs are factored in, suggesting that only a minority of flipped properties are now delivering a net profit, Hamptons said.

Aneisha Beveridge, head of research at Hamptons, said “flipping is no longer the profitable venture it once was” due to the introduction of the second home stamp duty surcharge.

She added that falling house prices across southern England and the rising cost of materials and labour since the pandemic had further dented investors’ profits.

“Even before factoring in stamp duty, refurbishment budgets now stretch much further than they once did, pushing profit margins to their thinnest levels in over a decade,” Beveridge explained.

‘Perfect storm’ for developers flipping homes

Threadgold said he was still managing to flip homes in the North East, Warwickshire and South Wales, but the market was under significant pressure.

He said the introduction of the stamp duty surcharge, as well as a host of other factors had created the “perfect storm” for developers.

Threadgold said it had been harder to get hold of skilled workers due to extra red tape post-Brexit while the rise in the National Minimum Wage has added to labour costs.

In particular, he highlighted significant rises in material costs, on items such as timber and plaster, during and since the coronavirus pandemic which have put major pressure on developers.

“Every little thing that goes into building or renovating a property has risen dramatically in the last four or five years. It's off the scale how much stuff has gone up in price,” he said.

He added that an increase in solicitor fees, as well as higher interest rates on bridging loans, used by many developers, was contributing to surging costs.

What is the impact on the housing market?

Kate Faulkner, property market expert, said because the proportion of housing transactions made up of flipped homes was so small in 2016 (2.4%), any falls since then wouldn’t have a major impact on the broader housing market.

In fact, she said it left more space for homebuyers to renovate properties themselves rather than buying from developers who would commission the work then add a premium on top.

However, she said less developers flipping homes could make it harder for sellers to shift homes with a smaller pool of buyers in the market.

How else can you make a profit on property?

If flipping isn’t for you, there are other options if you’re still keen on turning a buck in the property market. According to experts, there are two main options available.

Buy-to-let

Buy-to-let landlords may be facing a higher tax burden and mortgage rates, but there is still scope to turn a profit, said Sam Hadfield, managing director at property investment company BuyAssociation.

He pointed to rising rents as one reason why landlords can still make money across the sector. Average UK monthly private rents increased by 3.4% to £1,377 in the 12 months to March 2026, according to the latest figures from the Office for National Statistics (ONS).

“There is probably a bit of a cultural shift that's been happening over the last 10 years in the UK, where I believe that our younger working population are very happy to rent,” Hadfield said.

Hadfield said there was strong potential for BTL landlords buying property in regional spots such as Birmingham and Manchester, where populations are growing and people are “very happy” to rent.

He explained: “If you can develop that house, it's probably still sensible to do that and add some value to it, but I would say flipping it at the end is not the strategy. It would be to tenant it and hold it, [and] build your portfolio.”

Speak to your local council

Another option is to explore whether you can lease your property to the local council, said Faulkner.

This can lead to fewer void periods while providing social housing for those that need it within your community. Some councils take on the role of letting agent, carrying out day-to-day communication with the tenant which means less work for you.

Do note though, leasing a property to your council may mean you have less of a say over rent levels or choosing which tenants to move.

Waltham Forest Council, in North-East London, for example, offers private landlords leasing their properties up to £10,000 in cash incentives and covers the cost of annual insurance against rent loss and tenant damage.

Councils have been given new powers to fine landlords up to £7,000 if they fail to fix poor housing conditions in their properties in the latest stage of the government’s rental reforms.

Large parts of the government’s Renters’ Rights Act have come into force, including a ban on so-called “no-fault” evictions, an automatic switch to rolling contracts and limits on how often rents can be increased.

Landlords had until 31 May to hand over the government’s Renters’ Rights Act Information Sheet 2026 document, detailing the changes to tenants or risk a £7,000 fine.

In the latest change as of 22 June, councils can now take stronger action where landlords fail to fix problems, alongside existing enforcement powers.

Fines of up to £7,000 can be issued if landlords refuse to fix poor conditions.

The fine will apply to 21 types of hazards that are found to be serious - the most dangerous level - which include freezing conditions, faulty electrics, fire hazards, structural issues and unsafe layouts.

The new penalty sits alongside existing powers councils can use to tackle unsafe homes that put tenants at risk. These include forcing repairs, carrying out emergency works and recovering costs from landlords who fail to act.

The landmark reforms have raised fears already squeezed landlords, particularly those on a small-scale, have been given more reason to abandon the market and sell up.

Landlords can be fined up to £7,000 for failure to comply.

But these aren’t the only compliance failures that could result in a fine.

What other rules will landlords need to follow?

Beyond providing the tenancy information sheet, there are other rules that landlords have to follow or face a fine for breaching.

Landlords can’t ask for or accept rent from a tenant before a tenancy agreement has been signed between both parties.

Landlords also cannot stop someone from viewing or renting a property just because they are on benefits or have children.

Rental properties also have to be advertised with asking prices, while landlords are banned from encouraging people to bid higher than this advertised price.

There will also eventually be a register that landlords need to sign up to or they will face a fine. A date for this hasn’t been set yet.

Councils will be responsible for issuing fines and there could be higher charges for repeated failures and landlords could even be banned for serious breaches.

Landlords ignoring the rules can be reported by their tenants or found through council inspections.

There are more changes coming as well as part of the wider rental reforms.

By the end of 2028, it will be mandatory for landlords to be members of a new Landlord Ombudsman and to be on the private rented sector (PRS) database before they can even list a property for rent.

Failure to register to the new PRS Database and ombudsman could lead to an up to £7,000 civil fine, or up to £40,000 repeat fine.

Additionally, the minimum requirement for Energy Performance Certificates (EPCs) is due to rise from E to C in October 2030, while the full Decent Homes Standard will be introduced in 2035.

Under the standard, properties must be free from hazards, in a reasonable state of repair and with reasonable services such as a kitchen and bathroom and free from damp or mould.

Landlords can be fined up to £30,000 if their rental properties are found to be below the Decent Homes Standard.

If you are renting your property through a lettings agent, it is worth checking with them if you are compliant.

Lettings agency Kinleigh Folkard & Hayward suggests keeping clear records of agreements, inspections and communications, adding: “A well-organised system can make compliance easier and support positive tenant interactions, including maintenance requests. Landlords may find it beneficial to work with partner agents who offer online software to help with record keeping and to manage the additional requirements.”

Rob Norton, UK director at property software brand PlanRadar, said: “As the new rules come into force, landlords and property managers will face significantly greater pressure to evidence activity across their portfolios in real time. Every inspection, repair and tenant interaction will need to be accurately recorded and easily accessible.

“However, many are still relying on disconnected systems to manage these processes, creating gaps in visibility and increasing the risk of disputes or delays.

“As a result, we’re likely to see an acceleration in the shift towards digital tools that provide a clear audit trail and a single source of truth across assets. In an increasingly regulated environment, that level of oversight is becoming essential.”

Buy-to-let (BTL) repossessions are on the rise and experts are warning landlords face “tough times” ahead.

There were 770 BTL mortgage possessions in the last three months of 2025, up 10% from 700 in the same period in 2024, according to the latest data from trade body UK Finance.

Meanwhile, landlords taking out a BTL mortgage in mid-April compared to the start of March face higher repayments of roughly £1,300 more a year, based on analysis by data firm Moneyfactscompare.

This is based on borrowing £250,000 over 25 years at 5.45% versus 4.66% at the start of March. Mortgage rates have risen after conflict in the Middle East broke out on 28 February, amid expectations inflation could surge.

Rachel Springall, finance expert at Moneyfactscompare, said: “Tough times are ahead for landlords as the profitability of buy-to-let has been damaged due to tighter legislation, and with rising running costs eating into profit margins, it is squeezing them from all sides.

She added: “It is worrying to think that landlords could be failing to keep up with mortgage repayments.

“In the months ahead, the cost of living is predicted to worsen, and this will be magnified if landlords are due to come off a cheap fixed rate, because mortgage rates have been rising.”

We look at which is best out of a buy-to-let or shares in another piece.

Are rents going up or down?

Monthly rents outside Greater London stayed at £1,370 in Q4 2025 and the first three months of 2026, separate data published by property portal Rightmove shows.

It is the first time there has been no rise over this time period since 2017, although average rents outside of the capital in Q1 2026 were still 1.6% higher than Q1 2025.

Rightmove put the figures down to lower tenant demand and a greater supply of rentals on the market, with the total number of homes available to rent across Great Britain up 3% from the same time in 2025.

The property website also said slowing wage growth and higher than 2% inflation have squeezed people’s budgets and what they can afford to pay for rent.

In the first three months of 2026, 26% of rental listings saw a price reduction, the highest proportion at this time of year since 2012.

Colleen Babcock, property expert at Rightmove, said: “With more homes available to rent and less competition between tenants, landlords are needing to position rents correctly for the current market to secure a tenant.”

Are there reasons for optimism in the buy-to-let market?

There are some signs of positivity, with the number of newly-listed rentals coming onto the market in March 2026 6% lower than the same month in 2025, according to Rightmove.

UK Finance’s latest figures also show an 18% rise in the number of new BTL loans taken out in the last three months of 2025 compared to the same period in 2024.

The trade body’s data also reveals the average rental yield rose to 7.18% in Q4 2025, up from 6.99% in the same quarter in 2024.

However, this data does not reflect the impact of the conflict in the Middle East.

What landlords can do now

Landlords facing a tricky market can take steps to ease the strain and boost their margins, says Nick Mendes, mortgage technical manager at broker John Charcol.

Where a rise in rent is unavoidable, it “tends to land better when there is some visible value alongside it, whether that is improving storage, replacing tired fittings, being quicker on repairs or making the property feel better looked after,” says Mendes.

Reconsider asking for the highest possible amount of rent as well, as a tenant paying slightly less could still prove more profitable over the long-term.

Mendes says: “A reliable tenant on a slightly lower figure can still be the better outcome once void periods, re-letting costs and disruption are factored in.”

Meanwhile, landlords can spread equity around their portfolio to manage costs and borrowing. For example, by remortgaging a home with a small loan left on it, then using the equity to pay down a larger mortgage on another property, or by covering repair costs on another property.

It is worth reviewing costs more generally as well to see if you can save money, says Mendes, including home insurance and energy bills.

Separately, landlords will need to prepare for new Renters’ Rights Act rules coming into force from 1 May.

Landlords have faced a number of challenges in recent years, including a hike to stamp duty payable on second homes from 3% to 5% and higher mortgage rates.

Other regulatory changes have further impacted the buy-to-let market.

The introduction of Section 24, which was phased in between 2017 and 2020, means landlords now have to pay tax on their full rental income before finance costs are deducted, leading to much higher tax bills for some.

Stagnating house prices have meant smaller profits too, particularly for landlords in London where property prices have plummeted in parts.

Further changes are set to come into force in 2026 and beyond, including the rollout of Making Tax Digital for Income Tax, the Renters’ Rights Act and a new Energy Performance Certificate regime. Landlords need to prepare themselves for the changes.

Tim Thomas, policy and campaigns officer at Propertymark, a trade body for estate agents, said: “The operational landscape for many landlords is one of mass evolution as we head further into the year.

“For landlords it will represent some of the biggest changes in well over 30 years and it is essential there is proactive planning to ensure compliance on new rules.”

Here’s everything you need to know ahead of the changes coming into force.

Making Tax Digital for Income Tax - from 6 April, 2026

Making Tax Digital for Income Tax is being rolled out from 6 April 2026 for landlords with annual rental incomes over £50,000.

You will have to report your income and expenses to HMRC digitally on a quarterly basis.

Landlords earning between £30,000 and £50,000 will have to do this from April 2027 while individuals with income between £20,000 and £30,000 will need to follow the new rules from April 2028.

More than 860,000 self-employed people and landlords will have to start reporting their income and expenses through the new digital process from April 2026.

The change is part of the government’s efforts to modernise the tax system and ensure the information provided by taxpayers is more accurate.

Thomas, from Propertymark, said: “Over time, this methodology will ultimately supersede traditional paper or online self-assessment returns and will be implemented for everyone in phases, depending on turnover and as time progresses.”

Landlords will need to make sure they’re compliant with the new rules as penalties will apply to those that aren’t.

A penalty point is issued for a late quarterly update or return with a £200 penalty charged if you reach four points within two years.

You will need to report your income and expenses through compatible software. HMRC has a software finder tool you can use to find software that will work.

Renters’ Rights Act - 1 May, 2026

The Renters’ Rights Act is one of the Labour government’s landmark pieces of legislation but has faced criticism from landlords – yet, it’s still worth understanding how it will affect you.

The Act passed in October 2025, with the first major reforms on evictions and tenancies taking effect on 1 May 2026.

From 1 May, the following changes will kick in:

• End of ‘no-fault’ (Section 21) evictions – landlords in the private rented sector won’t be able to evict tenants without a valid reason.
• Fixed contracts abolished – all tenancies in the private rented sector will roll on from month to month or week to week (depending on the arrangement you have with a tenant) with no end date. Tenants can also end them with two months’ notice.
• New rental rules – landlords can only raise rent once a year, while renters will have the power to challenge unjustified hikes.
• No more bidding wars – landlords must stick to no more than the advertised rent price.
• One month’s rent upfront, max – landlords can’t ask for more than one month’s rent upfront.
• Refusing tenancy to those on benefits or with children abolished – it’ll be illegal to refuse tenants just because they receive benefits or have kids.
• Pets policy – renters will be able to ask to live with a pet and any requests can’t be “unreasonable refused” by landlords.

Other aspects of the Renters’ Rights Act will kick in from late 2026, including the introduction of a Private Landlord Ombudsman renters will be able to take complaints to.

A Private Rented Sector Database will also be rolled out so renters can check if you as a landlord are registered.

After this, Awaab’s Law, which makes it incumbent on landlords to address all emergency hazards like damp and mould, and already applies to the social rented sector, will be applied to the private renter sector following a consultation.

The National Residential Landlords Association, a trade association for landlords, has issued guidance on its website of what landlords can do ahead of the changes being implemented as part of the Renters’ Rights Act.

This includes inspecting your properties and addressing any potential hazards, doing checks on prospective tenants and ensuring your letting agent, if you use one, is ready for the changes.

It’s crucial you follow the new rules when they come into force – initial or minor non-compliance will incur a civil penalty of up to £7,000 and serious, persistent or repeat non-compliance a civil penalty of up to £40,000, with the alternative of a criminal prosecution.

New Energy Performance Certificate metrics - second half of 2027

Landlords must ensure all private rental properties have an EPC rating of C or above by 2030 under the Minimum Energy Efficiency Standard (MEES), up from E currently.

However, under a new system via the Home Energy Model landlords will have to meet two metrics out of a possible three to meet the C rating, rather than one.

Landlords will have to meet a “fabric performance” standard through installing measures like loft insulation, cavity wall insulation or double glazing.

They will then have to meet either a “heating systems” or “smart readiness” metric. The heating systems metric will mean landlords having to install measures like heat pumps while the smart readiness metric would see landlords getting solar panels installed.

You could face spending thousands to reach the new C standard.

The new metric system was due to be launched in October 2026, but ministers have now pushed this back to the second half of 2027.

This means what classes as an EPC rating of C now might change in the future.

If one of your rentals has an EPC of D or lower, you should take steps now to ensure they meet the current C rating so you’re more likely to pass the new EPC ratings.

Adding insulation to your loft or cavity walls, upgrading to LED lighting across your home and installing a smart thermostat can all boost the EPC rating of your home.

You might also be able to get a grant of up to £7,500 toward the cost and installation of a heat pump through the Boiler Upgrade Scheme, which has been extended to 2030.

Thomas, from Propertymark, said: “Given the current shortage of skilled tradespeople and the high volume of properties requiring upgrades, addressing these environmental improvements now is essential.”

Minimum qualifications for letting agents - date to be confirmed

In 2025, the government laid out plans to increase regulation among estate agents, namely by introducing mandatory qualifications for letting agents.

Ministers also laid out proposals to implement a Code of Practice setting out a minimum standard property agents, including estate, letting and managing agents, have to meet.

No date has yet been set on when these new rules would come into effect, with a consultation having closed and the government considering next steps.

Ahead of any changes coming in, landlords using letting agents should ensure they hold correct qualifications.

If not, you may want to switch to a different company that is ready for the upcoming law changes.

Property buyers are being urged to ensure they declare and pay the correct stamp duty or face potentially thousands of pounds in fines as HMRC almost doubles its investigations into property transactions.

Stamp duty land tax (SDLT) investigations rose 88% in the 12 months to 5 April 2025, jumping to 3,035 up from 1,617 in the same period in 2024, a Freedom of Information request to HMRC by accountants and business advisors Lubbock Fine shows.

The crackdown led to an extra £200 million in tax being recovered, up from £85 million in 2023/2024, an increase of 135%.

An HMRC spokesperson told MoneyWeek the increase is due mainly to increased scrutiny of “rogue repayment agents offering to make SDLT repayment claims” for homebuyers.

“If a claim is inaccurate, people could end up paying more than the amount they were trying to recover,” they said.

Why are stamp duty investigations rising?

HMRC has seemingly intensified its scrutiny of property deals following the increase in additional SDLT rate for second properties from 3% to 5% in the October 2024 Budget.

The increase has created a greater financial incentive for purchasers of a second property to mislead HMRC and to claim that they do not own another home, something HMRC is believed to be mindful of, that could also lead to more investigations.

The increased complexity of the SDLT regime is another factor causing more people to make mistakes when declaring their taxes, upping the risk of being investigated by HMRC as a result, according to Lubbock Fine.

Lubbock Fine warns that as the penalties can reach tens of thousands of pounds, people should seek professional advice to avoid making costly mistakes.

Graham Caddock, director at Lubbock Fine, said: “With SDLT rules becoming increasingly complex and constantly changing, people are far more likely to make mistakes. Errors can be very expensive."

The public attention around Angela Rayner’s underpayment of SDLT is also expected to increase the number of investigations carried out by HMRC.

Caddock said: “After the recent public attention around the Angela Rayner case, HMRC is likely to step up its scrutiny on second property acquisitions.”

Rayner, the now-former deputy prime minister and housing secretary, was caught underpaying stamp duty on her £800,000 seaside flat, and was forced to step down.

Why would HMRC investigate stamp duty claims?

HMRC would investigate stamp duty transactions if it was suspicious the property buying and selling activities didn’t match up and so the correct tax hadn’t been paid.

According to Lubbock Fine, some HMRC investigations have involved:

• Buyers falsely claiming they are replacing their main residence to avoid the SDLT surcharge on purchasing additional properties.
• Buyers transferring their home into a trust or to their partner before buying another property, which HMRC does not treat as valid grounds for avoiding the surcharge.

Caddock said: “HMRC looks at many different factors to decide what counts as your main residence. Whether a property has been transferred into a trust or a partner doesn’t necessarily carry much weight with HMRC.”

Many stamp duty investigations involve buyers wrongly assuming a property with some commercial use, such as self-contained rental flats, qualifies for a lower stamp duty charge, according to Lubbock Fine. However, that is only true in very limited circumstances.

To qualify, the commercial parts must be clearly separate, unsuitable for normal living, and the commercial activity ongoing when the property is bought.

Caddock said: “Many people wrongly assume that if a house has some commercial use, they can claim a lower SDLT. But if the property is still clearly suitable to live in, or if the commercial part isn’t properly separated, HMRC is likely to challenge that status.

“Similarly, if the commercial element of the property has only been added recently, HMRC is likely to claim it isn’t genuine and has been set up purely to obtain a tax advantage. That can end up costing people large penalties.”

‘Bogus’ claims for stamp duty refunds

The taxman has also been cracking down on what it describes as ‘bogus’ claims for stamp duty refunds. This where the buyer claims a property is not a residential home because it needs repairs and is not inhabitable.

HMRC is warning people purchasing properties to be vigilant of tax agents offering to secure stamp duty repayments on their behalf where a property they have bought needs repairs.

The taxman said it is “taking decisive action on spurious SDLT repayment claims”, using civil and criminal powers to deal with the minority who undermine the tax system.

Some tax agents have suggested that, for a fee, they can reclaim SDLT the buyer has already paid by saying that the property is non-residential because it’s uninhabitable, according to HMRC.

But making claims of this kind often leave the homeowner liable for the full amount of stamp duty, plus penalties and interest.

A recent Court of Appeal judgment in the case of Mudan & Anor v HMRC has confirmed that housing (“dwellings”) in need of repair are chargeable at the residential rates of SDLT, and that repayment claims based solely on a property’s condition are not valid.

This decision confirms HMRC’s long-standing view that if a property requires repairs but retains the fundamental characteristics of a dwelling, it is still suitable for use as a dwelling and attracts residential rates of SDLT. A key factor in determining suitability is whether a property had been previously used as a dwelling.

Anthony Burke, HMRC’s deputy director of compliance assets, said: “The Court of Appeal’s decision is a major win, protecting public funds. Homebuyers should be cautious of allowing someone to make a stamp duty land tax repayment claim on their behalf.

“If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.”

Tenants are benefiting from slower rental growth, which means less of their income is needed to go towards paying their rent.

The rental market is going through an overhaul, with the Renters’ Rights Act giving tenants more freedoms and in some cases deterring landlords from the sector.

Some landlords have even been selling up while comparatively lower mortgage rates make buying cheaper than renting.

All of this is contributing to increased rental supply and lower rental growth, which is good news for renters but may be bad for landlord profits as it is impacting the level of rent they can charge.

Property website Zoopla’s latest Rental Market Report shows demand for rented homes is 14% lower than a year ago as of March 2026 and at its lowest level for 6 years.

This has been attributed to falling migration and more renters getting onto the property ladder.

Meanwhile, there are 11% more homes for rent than last year, helped by landlord exits which are boosting choice for renters.

UK rents are just 1.9% higher over the past 12 months compared with 2.8% a year ago.

There are regional differences though and more affordable areas, where there are lower levels of supply, are seeing high rates of growth.

What is happening in the UK rental market?

The traditional imbalance between supply and demand in the rental market has been hit this year as more tenants have been able to afford mortgages to get on the property ladder.

Landlords and letting agents are having a tougher time renting out homes, with the average home staying on the market for 20 days before being rented.

High levels of supply and lower demand are hitting rental growth

How much do you need to earn to afford the average rent?

These regional rental differences are having an impact on how much tenants need to earn to afford their rent.

Propertymark analysed the average annual salary needed to rent a home in March 2025 and March 2026, based on the average required salary to pass referencing checks in the UK at 30 times the monthly rent.

Its analysis found that while tenants still need a higher salary overall on average, there are regions where the amount needed has actually dropped.

The organisation found that while London may have the most expensive rents on average at £2,193 per month, tenants don’t actually currently need their earnings to increase to keep up with the changes.

In fact, a 1.5% decline in the average rent required in London means tenants need a salary of 65,790 instead of £66,780 last year.

But there are some parts of the UK where tenants will need to be earning more to keep up with rent hikes.

For example, average rents are up 4.95% in Scotland to £1,123 per month and tenants will need to earn 3.8% more.

In Wales, tenants now need to earn 4.5% more to keep up with rent rises.

Across the UK, the average rent is £1,435 per month, which would require an annual salary of £43,050.

Megan Eighteen, president of the Association of Residential Letting Agents, said: "The rental market remains dynamic across many regions when viewed on a month-by-month basis. Price fluctuations are driven by a range of factors, including the volume and type of properties available at any given time, as well as local employment opportunities and their influence on demand. Together, these elements shape how consumers assess their options.

"Overall, rental inflation has been slowing since late 2024 on a year-on-year basis,” Eighteen continued. “However, looking ahead, it is important to consider ongoing global uncertainty and the potential impact this may have on the UK economy in the short to medium term, particularly in relation to household affordability.”

She warned that other changes such as the Renters’ Rights Act, which some expect to lead to a rise in rents, haven’t yet fully filtered down to consumers.

Making certain renovations to your buy-to-let (BTL) property could potentially boost its value by tens of thousands of pounds.

Nearly nine in ten (88%) landlords have undertaken renovations on at least one of their rental properties in the past five years, according to a survey of 1,000 landlords.

Adding an extension or loft conversion to your property could up its value by 24%, according to analysis by The Mortgage Works, part of Nationwide Building Society, who commissioned the survey.

On the average English or Welsh home worth £272,995, according to the Land Registry, this would add £65,518 to the asking price.

An extra bedroom can bump up the asking price of a BTL by 13%, while an extra bathroom and 10% increase in floor area may add 8% and 3%, respectively.

Adding a second bathroom on a BTL can add twice as much value to a home than an owner occupier property (4%).

Andrew Harvey, senior economist at Nationwide, said: “Location remains key to house values, but other factors, such as the number of bedrooms and bathrooms, are also important to landlords.

“Improvements that increase the size of the property, such as an extension or loft conversion, can add value and boost rental income.”

Across the 1,000 landlords, the average total spend on renovation work per landlord was £88,000.

The research also found these same four renovations can significantly impact rental income for landlords.

Adding an extension or loft conversion can boost it by 26%, while creating more space to add a double bedroom can add 12%. A BTL property with a second bathroom attracts a 6% rental rise.

Increasing the energy efficiency of a property could cut bills for your tenants and increase the home’s value too, the research found.

Harvey explained: “A more energy efficient BTL property (rated A or B) attracts a significant premium of 10.9% compared to a similar property rated ‘D’.”

Solar panels top list of most popular green improvements

Of the 1,000 landlords surveyed, 18% had green improvements made to their home. Of these, 37% had solar panels installed and 33% had pipe or boiler insulation put in. Nearly a third (32%) had electric car charging installed.

Harvey said it was “likely” some of these improvements were made so landlords could meet minimum energy efficiency standards (MEES). These require rental properties to have a minimum energy efficiency rating of E in order to be let out.

The number of households with solar panels installed is on the rise, with nearly 1.5 million dwellings in England now having them, according to Nationwide. This equates to around 6% of all English homes, and is up from 3% in 2013.

Electric vehicle (EV) charging is also becoming more widespread, with 1.8 million homes now having a charging point – 7% of all housing stock in England.

What is BTL and how does it work?

Buy-to-let (BTL) is when you buy a property with the intention of renting it out as a source of income. If house prices rise, you can also profit from any capital gains.

Unless you can afford to pay for a house up front, you will have to take out a buy-to-let mortgage. These are like residential mortgages, but with some differences:

The amount you can borrow on a BTL mortgage is based on how much rent the property can generate versus the cost of the mortgage

BTL mortgages sometimes require you to have a minimum salary so you can cover any shortfall in rent, such as during periods when there are no tenants in the property

Lenders class BTL mortgages as riskier than residential mortgages, meaning the interest rates are generally higher

The minimum deposit amount required to buy a property to let is typically 20-25%

As with any financial decision, buying a property with the specific intention of letting it out should only be done if it’s fiscally responsible. That means you need to consider the “rental yield”. Anything north of 5% is classed as a good rental yield.

The rental yield is the return you get on the property and can be worked out by dividing the annual rental income by the purchase price, then multiplying this number by 100.

For example, annual rent of £10,000 divided by a property you bought for £200,000, multiplied by 100, gives you a gross yield of 5%.

If you’re not sure how much rent to charge, you can speak to a letting agent. There are also free-to-use calculators which guide you on how much rent you should charge based on your property type, location and demand, like Homeowners Alliance’s.

We look at the best areas for buy-to-let landlords in a separate guide.

Landlords have a whole host of practicalities to think about after they have invested in a property and rented out the house or flat.

There are an estimated 2.82 million private landlords in the UK who should consider protecting their valuable assets with insurance.

Standard home insurance you buy as a homeowner will not cover you against many of the risks associated with being a buy-to-let landlord. Landlord insurance is an important safety net to secure.

What is landlord insurance?

Landlord insurance is a specialist type of cover for property owners who rent out their homes. It protects your property against damage and loss from theft, fire and bad weather.

It also comes with landlord specific features such as cover for unpaid rent or damage caused by a tenant.

It can also cover contents and other extras if you opt for more comprehensive insurance and add-on features.

What does landlord insurance include?

Each policy is different but broadly your insurance will cover theft, fire, flooding, extreme weather events, burst and frozen pipes, storm damage, subsidence, loss or theft of keys, accidental or malicious damage by tenants and costs associated with eviction.

If cover includes contents, then furniture, freestanding appliances and any garden equipment will be protected too.

You can also add legal expenses insurance that can help to recover legal costs as a result of things like pursuing unpaid rent, tenant personal injury claims and eviction.

Public liability cover and loss of income might also be in some more comprehensive policies.

How much does landlord insurance cost?

The level of premium you will pay depends on all the usual factors used to calculate standard home insurance, with a few extras thrown in.

An insurer will weigh up the risks – and cost – judging by the location, type and size of property, the cost to rebuild it and security features such as a burglar alarm.

The cost will also factor in what type of tenants you plan to allow.

The average cost of landlord cover including contents and property owners’ liability insurance is £301.87 a year, according to comparison website GoCompare.

Is landlord insurance mandatory?

There’s no legal requirement to buy landlord insurance but getting cover might be a condition set by a lender if you have a buy-to-let mortgage.

Landlords who maintain their properties to a high standard can reduce the risk of some failures, say, by making sure the place is kept in a state of good repair. But it’s not possible to get rid of risks entirely, which is why this insurance is an important consideration.

Why might you need landlord insurance?

While being a property investor can be financially rewarding, just as with any investment, there are also plenty of risks involved.

Landlord insurance can help manage those risks by protecting against serious financial loss.

It can give you peace of mind that a valuable asset is protected, and that if the worst-case scenario comes to pass, you’re covered.

This is especially true of the legal cover that can help to recover costs if you need to pursue a tenant for unpaid rent or if a tenant makes a claim for personal injury caused in your property.

Do I need landlord insurance if I'm letting a room?

If you rent out a room in your own home you possibly don’t need separate cover but you would need to tell your existing home insurer.

It could potentially increase your premium because insurance providers consider lodgers – who might be complete strangers – to be an extra risk.

Failing to tell them so could invalidate your insurance which is a false economy should you need to make a claim. Your insurer might want you to pay for liability insurance to cover you if your lodger takes legal action after injuring themselves in your home, for example.

Some providers, however, might not cover you if you rent a room out to a lodger, so you may need to switch home insurers. Bear in mind that you may be charged a fee for cancelling your existing policy early.

Do I need landlord insurance for short-term rentals?

The rise of online platforms like Airbnb has made it easy for individuals to rent out their properties on a short-term basis rather than sign up tenants for longer periods. This allows more flexibility in when and for how long a property is rented out, which helps if it’s perhaps a holiday home you would like to use for yourself sometimes.

Renting a home for a short-term comes with slightly different risks compared with a tenancy agreement as short-term lets involve more frequent turnover and potential for damage. So standard home and most landlord insurance won’t give you the cover you need for letting a property via Airbnb – you will need a specialist policy.

How to compare landlord insurance

Just like when you compare standard home insurance, you will need to have lots of details about the property to hand.

You’ll need the address, the type and size of property, when it was built and how long you have owned the place. You’ll also need to get the property’s rebuild cost too. If you’re unsure on the rebuild cost of your property, the Association of British Insurers provides an online rebuild costs calculator.

As always, you will be asked about your claims history in the last five years.

If you are getting contents cover you will need to estimate the value of the contents for the ‘sum assured’. Do a room-by-room inventory of everything in the property, including outbuildings like sheds and garages to work out what it would cost to replace all of the furniture, appliances and other items you provide to your tenants.

You can add all this into a comparison website to get quotes back. As you study the list of quotes it’s important to read what’s covered in each policy you like the look of.

Some comprehensive policies will pay for alternative accommodation if a fire or flood leaves your rental uninhabitable.

These will be more expensive but it might be money well spent to get the right cover in place.

What about other types of insurance for landlords?

There’s also rent guarantee insurance to consider. This type of insurance specifically deals with unpaid rent.

It protects you as a landlord from potential financial hardship if your tenants don’t pay their rent while you seek repossession of the property.

Usually you are covered for rental payments for up to 12 months with a limit on the amount paid out.

It should also cover you for legal expenses associated with eviction, including court costs up to between £50,000 and £100,000.

This type of insurance is often an add-on to landlord cover. It might become more in demand when rule changes under the Renters' Rights Bill will make it more difficult for landlords to evict tenants who aren’t paying their rent.

A key element of the bill is the scrapping of Section 21 no-fault evictions. So this type of insurance could be invaluable in the event you find that rent payments stop.

Second home owners in the capital face paying capital gains tax of more than £16,000 on average when they come to sell, according to new analysis – but a slump in prime London property prices means some sellers escape the bill.

The London property market is in the doldrums, potentially making it a good time to buy a house there. For second homes across the capital, purchases dropped by 42% in the 12 months to June, according to data from estate agent Jefferies London, while in the prime market, the decline was steeper at 51.4%. Overall transaction levels in London fell by 20.5% year-on-year.

However for those who do manage to sell a second property, and for a profit – where a gain is made – capital gains tax is due. You pay higher rates of capital gains tax on a property than on other types of assets. Basic rate taxpayers currently pay 18% on any gains they make when selling an additional property. Higher and additional rate taxpayers currently pay 24%.

The gains seen on the average London property over the last decade were analysed by Enness Global, a mortgage broker. It found increases in property prices in the last 10 years, plus reductions in capital gains tax allowances and hikes in rates, will leave the average seller with a double digit CGT bill to pay.

Islay Robinson, CEO of Enness Global, said: “Capital gains tax has become an increasingly significant consideration for property investors – particularly following recent rate increases and the reduction of the annual exemption – and whilst the London market continues to deliver robust long term returns in many areas, those gains now come with a heavier tax burden for second home owners.”

We look at ways to cut your capital gains tax bill in a separate article.

What’s the average capital gains tax due on second homes in London?

Enness looked at the change in property value since 2015, less the £3,000 capital gains tax allowance and other eligible cost deductions such as stamp duty, legal fees, and estate agent fees.

It then calculated the total capital gains tax payable at both 18% and 24% to reflect the current rates applied to basic and higher rate taxpayers.

The research found across London, for a lower-rate taxpayer, the average capital gains tax due on a second home would be £12,334, while a higher-rate taxpayer selling a second home in London today would face a charge of £16,446.

This is based on the average property investment having cost £462,097 ten years ago, requiring a stamp duty payment of £13,105 and legal fees of £2,399. A decade later, the same property has increased in value to £561,587, a gain of £99,490.

With an average estate agent fee of £9,547 and legal fees of £2,915 at the point of sale, this puts total eligible deductions, for the purpose of the capital gains tax calculation, at £27,966. With the additional £3,000 CGT allowance, total capital gains subject to tax would stand at £68,524 – with capital gains tax payable at either 18% for a basic rate payer or 24% for a higher rate taxpayer.

The worst London boroughs to be a second home owner

The worst borough to be a second home owner over the last decade according to the research, based on a 24% higher-rate capital gains tax liability, is Redbridge, where a £31,381 capital gains tax bill would be due.

Next worst for second home owners selling up are Havering (a £30,153 CGT bill), Bromley (£29,140), Bexley (£29,052), and Waltham Forest (£29,006).

Each of these areas has seen substantial house price growth since 2015, resulting in significant capital gains tax bills for those exiting the market.

Prime London second home owners escaping CGT

However, while second home owners in outer London have faced steep increases in property values – and so capital gains tax bills – second home owners across prime central London have largely escaped CGT due to a decade of market stagnation and, in some cases, decline.

In Kensington and Chelsea, the average home is now worth £75,546 less than it was ten years ago, according to Enness’ analysis, meaning no capital gains tax is owed when selling a second home. The same applies to Westminster, Hammersmith and Fulham, and the City of London, where prices have all fallen since 2015.

Even in boroughs where values have grown modestly, weaker market performance has left second home owners exempt from CGT when selling up. Areas such as Tower Hamlets, Islington, Wandsworth, and Southwark have seen minimal appreciation over the last decade, leaving their long-term investors effectively immune from capital gains taxation once the CGT allowance and deductible costs are accounted for.

Robinson said: “The reduction in values across many prime postcodes over the last decade has shielded many high-end second home owners from capital gains liabilities. So, whilst they may be in the red with respect to the equity built on their investment, the silver lining is that they won’t be penalised for trying to off-load underperforming bricks and mortar assets in the current market climate.

“It’s a reminder that property investment returns are highly localised and that strategic planning, timing, and structuring are vital when managing or exiting a high-value asset.”

First-time buyers could be left worse off if chancellor Rachel Reeves changes how property is taxed in a bid to target wealthy homeowners and buy-to-lets.

With the Budget less than two months away, major mortgage lender Coventry Building Society is warning proposed tax reforms could backfire on first-time buyers.

Reports suggest the chancellor is considering a number of reforms related to home buying.

While the changes may seem targeted at wealthier homeowners and buy-to-let landlords, the ripple effects could be felt across the housing chain, making it harder for aspiring buyers to get onto the property ladder.

We look at whether now is a good time to buy a house in a separate article.

Scrapping stamp duty for buyers and replacing it with a new property tax on sellers of homes worth more than £500,000 is one idea on the table, The Guardian reported.

Plans to allow homebuyers to pay stamp duty in instalments, rather than paying it all upfront, are also being considered, according to CityAM.

Another mooted proposal included ending the capital gains tax (CGT) exemption on main residences above certain thresholds – meaning owners of higher-value homes would face large new bills when they sell – the Times reported.

Reeves is also said to be considering extending National Insurance to include the tax on rental income, in speculation also raised by the Times.

On the surface these changes don’t look like they touch first-time buyers, but the hidden consequences could be huge, warned Jonathan Stinton, head of mortgage relations at Coventry Building Society.

“When you shake the top of the ladder the impact is felt all the way down – which is why any reform has to be carefully thought through, to avoid creating problems for the people who need support the most,” he said.

How changes to property tax could hurt first-time buyers

Stamp duty

Switching stamp duty from buyers to sellers sounds like a huge win for first-time buyers because it takes a big upfront cost off the table – but it’s a hollow victory if there aren’t any homes to buy.

“If sellers at the top end of the market are hit with bigger tax bills, they may simply stay put. That could mean fewer family homes are freed up, and ultimately fewer starter homes coming onto the market. So while upfront costs may be lower, finding the right home could be harder,” said Stinton.

Alternative potential plans to allow buyers to pay stamp duty in instalments might ease the initial large, upfront cost burden for first-time buyers. But it could also saddle them with another monthly expense, making overall affordability tighter, Stinton pointed out.

Capital gains tax

Taxing main homes through CGT could turn downsizing from a smart financial move into a costly dilemma. Faced with a hefty bill, many homeowners might simply stay put – putting another squeeze on the flow of family homes on the market.It also risks weakening the Bank of Mum and Dad. Stinton said: “The money that older homeowners unlock when they downsize is often passed on to children and grandchildren to help with deposits.

“If the taxman bites a big chunk out of the proceeds of a sale, the next generation of buyers could find it harder to get the financial support they’ve been counting on.”

More than half of first-time buyers received financial help from their family to make house purchases last year, according to estimates by estate agency Savills.

An average of £55,572 was given in loans and gifts by the so-called Bank of Mum and Dad to buyers, it said.

National Insurance on rental income

Extending National Insurance to rental income could mean landlords will be faced with either passing the cost on to their tenants or selling up altogether.

On the one hand, landlords selling up may present more opportunities for people looking to get a foot on the property ladder right now.

But, for anyone trying to save up a deposit, any further reduction in the supply of rental properties is likely to put upward pressure on rents.

“And with the Renters’ Rights Bill on the horizon, some landlords may even hike rents re-emotively before rules kick in. For first-time buyers saving for a deposit, that makes it even harder to put money aside each month,” Stinton said.

Landlords were forced to pay a record £107 million to HMRC last year as part of a compliance crackdown by the tax office – more than double the amount clawed back three years ago, according to new data.

On average buy-to-let landlords were forced to pay an average of £13,713 each to HMRC in 2024/25, according to data obtained by accountancy firm Price Bailey under the Freedom of Information (FOI) Act.

The findings come as landlords are forecast to exit the BTL market in droves, with smaller landlords in particular selling up in their tens of thousands to avoid more onerous tax and compliance rules, according to brokers, a view echoed by higher capital gains tax receipts on property.

The HMRC figures released under the FOI relate in part to the Let Property Campaign (LPC), which was launched in the 2013/14 tax year, for landlords who owe tax through letting out residential property in the UK or abroad to report previously undisclosed taxes on rental income.

If you’re a landlord and you have undisclosed income, you must tell HMRC about any unpaid tax immediately. You’ll then have 90 days to work out and pay what you owe. If you do not do this now, and HMRC finds out later, you could get higher penalties or face criminal prosecution.

Andrew Park, tax investigations partner at Price Bailey, said: “We’ve assisted large numbers of landlords in making voluntary disclosures over the last few years – typically, after they’ve received an HMRC nudge letter.”

Let Property Campaign

The Let Property Campaign has brought in £570 million pounds in total from UK residential landlords, according to the Freedom of Information request. The nearly £14,000 in tax per disclosure HMRC recovered in 2024/25 was by far the highest amount since the campaign’s inception more than a decade ago.

The data released under the FOI represents tax recovered from voluntary disclosures under the LPC, and from other compliance related activities, such as HMRC’s non-responder and discovery assessment work.

According to the Ministry of Housing, Communities & Local Government, there were about 2.2 million UK private landlords in the first quarter of 2024. There have been 100,332 disclosures so far under the LPC, representing just over four percent of the total population of UK landlords.

These numbers make it clear HMRC will be able to identify thousands more undisclosed landlords every year for many years to come, according to Price Bailey.

Rules for landlords

While landlords are often making little or no economic profit, they often genuinely fail to realise that they have taxable profits to disclose or may need to file a self-assessment tax return.

“They are often accidental landlords who kept a property after moving to cohabit with a new partner, inherited a property or temporarily moved abroad. Many are not financially sophisticated or in receipt of high levels of other income, haven’t properly understood their responsibilities and haven’t previously sought advice,” Park said.

Many landlords get caught in the “phantom profit” tax trap. Since the phased withdrawal of mortgage interest relief, many landlords now appear profitable on paper but only because tax law ignores the full cost of debt servicing.

This creates a “phantom profit” effect: landlords owe tax on income they never truly received, pushing them into arrears or triggering compliance failures, said Park.

“There is a widespread confusion about the different tax treatment of capital expenditure and revenue expenditure,” he added.

Capital expenditure, such as installing a significantly upgraded kitchen, is not deductible against letting income, whereas repair and maintenance of an existing kitchen or a like for like replacement is deductible.

“That distinction can be grey around the edges and trips a lot of landlords up,” Park said.

Landlord tax pitfalls

Price Bailey pointed out that recent and upcoming UK tax changes are likely to further complicate compliance with HMRC rule for landlords, especially those operating without professional advice or digital systems.

These include the introduction of Making Tax Digital for income tax, which will require landlords to make quarterly submissions via HMRC-compliant software from April 2026.

Also the reduction in the annual capital gains tax (CGT) exemption, which was cut to just £3,000 from April 2024, and the higher CGT rates which apply to disposals after October 2024 (18% for basic-rate, 24-28% for higher-rate taxpayers) will mean more landlords will face CGT liabilities when selling property.

We look at ways to cut your capital gains tax bill in a separate article.

At the same time many landlords have shifted to limited company structures to preserve mortgage interest deductibility. But corporation tax now ranges from 19% to 25%, depending on profit levels, which makes tax planning more complex, including around how profits are extracted, whether by dividends or salary.

Park said: “More frequent reporting, reduced allowances and the growing complexity of relief rules are all making compliance more challenging for landlords.”

Landlords should review their tax affairs carefully, especially if they have never sought advice or assumed no tax was due.

“With HMRC’s compliance activity intensifying, even unintentional omissions can lead to significant liabilities,” said Park.

The Treasury is considering targeting landlords in the Autumn Budget by applying National Insurance to rental income, according to the latest rumours.

The Times reports that officials are examining proposals to hike the taxes for buy-to-let landlords in the hope of raising £2 billion in chancellor Rachel Reeves’s upcoming Budget.

The speculation follows other reports of potential property tax hikes, suggesting the Treasury is looking closely at property tax reforms as a way to balance the books.

According to The Guardian, Reeves is considering replacing stamp duty with a national property tax on the sale of homes worth more than £500,000.

The chancellor is also said to be mulling over a mansion tax for homes by introducing a capital gains tax charge on properties that sell for more than £1.5 million.

The latest rumour of potentially hitting landlords with National Insurance is apparently an option on the table for the government as it tries to avoid breaking the “red lines” set by Reeves before the general election not to put up VAT, income tax or National Insurance.

Earnings from property, pensions and savings are largely exempt from National Insurance contributions, which are levied on employees’ wages at a rate of 8%.

Allies of Reeves told The Times that widening the scope of National Insurance so that it includes rental income would not break the red lines because it wouldn’t involve raising the rate. They likened it to putting VAT on private school fees.

How would the policy work in practice?

National Insurance is charged at 8% on employee contributions (6% for self-employed people), dropping to 2% for income and profits over £50,270.

There was £27 billion of net property income in 2022-23, according to the most recent official data. So, an extra levy of 8% on property income would have generated about £2.16 billion for the Treasury.

If the same National Insurance rates are applied to rental income, the fact that it falls to 2% on higher incomes means smaller landlords will be hit harder.

According to The Times, the most common property income bracket is £50,000 to £70,000, meaning thousands of landlords could be hit by an extra £1,057 bill per year if forced to pay National Insurance.

“Unlikely to lose the government votes – but will push more landlords to sell up”

Experts say that while a move like this may not be that unpopular – especially compared to the massive backlash the government has faced over things like the Winter Fuel Payment and inheritance tax changes – it will hit tenants as well as landlords.

Tom Bill, head of UK residential research at Knight Frank, comments: “Targeting landlords won’t lose the government many votes but such moves invariably end up hurting tenants.

“With landlords already selling up ahead of the Renters’ Rights Bill and tougher green regulations, another disincentive would reduce supply further and put upwards pressure on rents. Those that stay may pass on the extra costs in other ways. Governments need to fully appreciate that when you tax an activity, you get less of it.”

Shaun Moore, tax and financial planning expert at the wealth manager Quilter, agrees, saying that an additional tax burden “risks accelerating the exodus of landlords from the market”.

For landlords that continue to let out properties, the addition of National Insurance “would almost certainly be passed on to renters through higher rents”, according to Moore.

He adds: “We would also expect to see the increasingly popular practice of holding properties within a limited company structure skyrocket as landlords look for ways to mitigate the impact of these changes.

“Ironically, this could mean the government’s expected revenue boost is far smaller than anticipated.”

According to Marc von Grundherr, director at the estate agent Benham & Reeves, the rumoured policy “smacks of political point-scoring rather than sound housing policy”.

He comments: “Applying National Insurance to rental income threatens to undermine rental supply by squeezing small and medium-scale landlords, who may pull up stakes or restructure.”

What does the Treasury say?

The government does not comment on speculation around future changes to tax policy. This means there are often rumours flying about in the run-up to fiscal events like the Budget, which do not ever materialise and get announced.

The Treasury did not address the rumours about applying National Insurance to rental income when MoneyWeek contacted the department for comment, instead saying: “As set out in the Plan for Change, the best way to strengthen public finances is by growing the economy – which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8 billion and cut borrowing by £3.4 billion.

“We are committed to keeping taxes for working people as low as possible, which is why at last Autumn’s Budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee National Insurance, or VAT.”

Holiday lets have become an expensive investment in recent years. A hike in stamp duty and council tax premiums, as well as the end of the furnished holiday lettings tax scheme, have been pushing up costs for second homeowners and biting into profits.

However, amid seemingly relentless sunshine and fewer rainy days in the UK this year, a number of Brits are deciding to holiday closer to home.

Staycations are growing in popularity – nearly two-thirds (63%) of Brits will take a UK break this year, and about a third (34%) are planning to make it their main holiday in 2025, according to research by Sykes Holiday Cottages.

Holiday spending is also on the rise, with families expected to splurge £1,292 this year – up from £1,070 or a 17% increase year-on-year.

This comes as good news for UK holiday let owners, especially those with properties in popular locations near the coast or tucked away in the countryside.

Here are the top locations where Brits are choosing to spend their days off, and where buy-to-let investors may find it profitable to own a property.

What are the most profitable holiday let destinations in the UK?

The top UK destination for holiday let investment in the UK is Brixham in Devon, new research shows, with bookings going up by 62% year-on-year in the harbour town.

That’s based on the latest Staycation Index report by Sykes Holiday Cottages, compiled using bookings data from 22,500 properties in the UK.

Trailing close behind is Teignmouth – also in Devon – and Saundersfoot in Pembrokeshire, with booking growth of just over 30%, suggesting coastal retreats are a favourite among trip goers.

The top destinations surging in demand are listed in the table below.

Source: Staycation Index report by Sykes Holiday Cottages

Solo staycations surged by 28% in 2024, with Whitby, Keswick, and Ambleside being the most popular destinations.

Are holiday lets still a good investment?

James Shaw, managing director at Sykes Holiday Cottages, says: “While we recognise that some owners are facing increasing pressure from recent tax changes, the continued growth in domestic bookings – particularly in trending locations – presents a valuable opportunity to offset those challenges with strong demand and healthy returns.”

Shaw adds that the “enduring appeal of UK staycations is not only supporting local economies but also helping many owners navigate this shifting landscape”. The Sykes data shows that domestic tourism is projected to boost the UK economy by £24 billion this summer, which presents landlords with the opportunity to profit from the summer boost.

The buy-to-let market has faced a challenging few years, whether it’s the end of the furnished holiday letting tax or the withdrawal of the business asset disposal relief – something which previously reduced capital gains tax to 10%.

So, while holiday rentals are generally popular for their high returns, is that still the case?

Robert Jones, founder of Property Investments UK, says holiday let investments “generally earn much higher rents and yields than long-term buy-to-lets”.

He gives the example below:

• Long-term let: If the property costs £200,000 to buy, and is rented out at £1,000 per month, it would earn an annual income of £12,000, or a rental yield of 6%.
• Holiday let: The same property would generate a potential monthly income of £2,250 at 70% occupancy, considering that its average nightly rate is £107. That would mean that it earns the landlord an annual income of £27,000, or a rental yield of 13.5%.

While the running costs would be higher for a holiday rental, Jones says that it’s “not unrealistic to double your return compared to a traditional buy-to-let strategy, when you consider the net rental yield and income for both strategies.”

When I began contributing to MoneyWeek two decades ago, Britain was in the middle of a property mania. Flipping houses was the path to rapid riches. TV shows were full of people renovating flats to sell – often spending more than they earned back. Financial-advice columns were stuffed with those who wanted to gear up their buy-to-let portfolio to buy more, or had already borrowed too much and were panicking.

Today, Britain is still obsessed with property, but the mood is very different. It’s not simply that investing in property is less appealing due to tax changes and new laws. There has finally been some long-overdue realisation that expensive housing is a curse that holds back the economy, not a source of good fortune.

Still, I am not as confident as Matthew Lynn that property prices are going to plummet to reasonable valuations. Houses are not like most assets: many people buy once they can afford to because they are tired of renting sub-standard properties or because they want to be certain of housing costs for later in life – even if they think prices are expensive. Unless interest rates soar (which seems unlikely) or supply vastly increases – and the government doesn’t have the appetite to provide the state backing needed – a crash is less probable than a long stagnation.

Housing market stagnation

In fact, quiet stagnation is what we have been seeing for a while. For this, refer to the Land Registry data: it is much less timely than other indices (sales can take a very long time to be added) and so doesn’t show turning points well, but it provides the most comprehensive view of long-term trends.

These series show that house prices have risen strongly in nominal terms since the global financial crisis. Yet adjust for inflation and it’s a different story – real house prices are now below where they were in 2007. Of course, housing is not one market; property type and location are critical. Look at London and we see stagnation since 2016 but also a gulf opening up between terraced houses and flats. Still, even flats are only back to 2007 levels in real terms, when they were already unprecedentedly expensive relative to incomes. Britain’s financial centre has a stagnant yet still-overpriced housing market and a shrinking yet arguably undervalued stock market. No wonder the mood is so bleak.

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The average monthly cost of renting a home in the UK has risen by £221 in three years, outpacing the increase in mortgage payments over the same period.

According to property website Zoopla, the average repayment on outstanding mortgages, pushed up by higher mortgage rates, has only increased by £218 a month.

Renters also tend to pay more than homeowners. Average rents in the UK currently sit at £1,283 a month, with typical mortgage repayments sitting at £1,154.

The 21% rise in rents since 2022 is due to demand for rented homes growing rapidly during 2022 and 2023 while the stock of private rented homes remained broadly static due to low levels of new investment by buy-to-let landlords.

Richard Donnell, executive director at Zoopla, points out that there’s been a big focus on interest rates rising and the impact on homeowners with mortgages - but that tenants have also faced steep increases in their costs.

“A shift to higher mortgage rates raised alarm over how mortgagees would be able to afford higher repayments over the last three years. The sales market has been resilient thanks to mortgage regulations that ensured borrowers could afford higher mortgage rates,” he comments.

“Renters have faced similarly steep increases in the cost of renting in recent years with rents pushed higher on strong demand and limited supply of homes for rent, which has hit lower income renters hardest.”

However, rent increases have slowed considerably. Last month, Zoopla said that rents are rising at their slowest pace in four years as tenant demand cools and affordability pressures start to bite. Average UK rents increased by 2.8% in the 12 months to April - less than half the 6.4% recorded last year.

Which UK areas have seen the biggest increase in rents?

Some local areas have seen particularly rapid increases in rents over the past three years as rental demand has run ahead of the growth in rental supply.

In places like Oldham, Wigan and Bolton, rents have surged by more than 31% in three years as rents rose from a relatively low base.

Rents are highest in London, with parts of the capital registering the largest monetary increases, up by £400 a month over the past three years. The biggest rental growth has been in more affordable areas in outer London, such as Ilford in east London.

Source: Zoopla Rental Index 2025

Why have rents risen so much?

The rise in the costs of renting since 2022 is down to a surge in rental demand in the wake of the pandemic.

According to Zoopla, a strong labour market and higher levels of migration for work and study have boosted rental demand. Mortgage rates spiked over 2022 and 2023, making it harder to buy homes, so many first-time buyers remained in the rental market for longer. This further boosted demand while also suppressing supply, pushing rents higher.

Robust growth in average earnings over the past three years has supported the faster growth in average rents. However, private renters on lower incomes and those relying on state support have faced a greater squeeze on living costs from higher housing costs.

Earlier this month, the government’s English Housing Survey revealed that on average, private renters spend 34% of their income on rent, while those with mortgages spend 19%.

Sarah Coles, head of personal finance at Hargreaves Lansdown, notes: “The eye-watering cost of rent is devouring huge chunks of people’s income, making it incredibly difficult to build a deposit – it’s no wonder millions of people risk being stuck in the rental trap.”

Donnell at Zoopla notes that rental inflation is now running at its lowest rate for four years, due to less migration for work and study, and improvements in mortgage market conditions for first-time buyers.

Last week, the government announced a new 95% mortgage guarantee scheme, which should help first-time buyers and home movers with small deposits.

However, Donnell warns that rents will remain high. “The stock of homes has remained static for almost a decade due to low investment by landlords. A continued supply/demand imbalance is keeping a steady upward pressure on rents”.

Portfolio landlords could save as much as £8,500 by remortgaging onto current lower buy-to-let rates, according to new analysis, but risk paying thousands extra if they don’t act.

Buy-to-let (BTL) property portfolio investors who fail to refinance to fix their mortgage could see their monthly mortgage costs climb by over £23,000, the research by specialist property finance expert, Rangewell, has found.

Rangewell analysed the average amount owed through BTL mortgage borrowing by the average portfolio landlord. Then it looked at how much better off they could be today when coming to the end of a two year fixed term mortgage as a result of improving mortgage rates.

Finally it estimated the cost they could incur by failing to remortgage and reverting to a standard variable rate.

The research shows two years ago the average portfolio investor held 8.6 BTL properties financed across 5.8 loans to the tune of £503,680 in BTL mortgage borrowing owed.

At the time, the average two year, fixed rate BTL mortgage product, at a 75% LTV, would have seen them offered an average mortgage rate of 4.78%.

Based on the level of borrowing at £503,680, this would have equated to an interest-only monthly mortgage repayment of £2,006 per month.

Fast forward to today and the average rate for the same mortgage type has fallen to 3.93% thanks to improvements to the mortgage landscape.

As a result, those coming to the end of a fixed-rate term today and taking a pro-active approach to refinancing could see the average monthly cost of their portfolio mortgage fall to £1,650 per month when making an interest-only repayment.

That’s a reduction of £357 per month, or £8,563 over the course of a renewed two year term.

However, failing to refinance and reverting to standard variable rate could be a costly mistake. In doing so, the average portfolio landlord could see their mortgage rate jump to 7.09%.

This would push the monthly cost of their interest only mortgage repayment to £2,976, an increase of £970 per month, which over the course of a renewed two year term would equate to an increase of £23,270.

Alasdair McPherson, head of partnerships at Rangewell, said: “The mortgage market has moved decisively back in favour of portfolio landlords – but the gap between best-in-market rates and legacy rates that landlords can fall into through lack of research or professional funding support is now dangerously wide.”

Opportunities in buy-to-let

For portfolio landlords there are strong refinance and re-leveraging opportunities in several specialist sectors, according to Rangewell’s McPherson.

Semi-commercial properties (e.g. flats above retail)

Lender appetite for mixed-use portfolios has increased substantially, McPherson has found. This is one area where refinance terms – and rental yields – are often better than those available to pure residential portfolios, it added.

Holiday let portfolios

Yields in this sector have always been strong, Rangewell said, but underwriting has historically been stricter. Now, McPherson is seeing a growing number of lenders actively open to well-managed holiday let portfolios, meaning refinancing can not only cut costs but also unlock equity for further acquisitions.

Supported living and social care portfolios

These portfolios have historically proved problematic for many landlords, as most lenders didn’t understand the business model. There is now a much wider range of specialist lenders who actively understand and support supported living, according to McPherson, making a huge difference in terms of refinance and expansion potential.

Foreign investors with UK property portfolios

Historically, overseas landlords have faced much higher interest rates due to their lack of UK credit history. More lenders are now recognising this growing asset class, and are willing to offer competitive terms, McPherson said. That allows these landlords to reposition their portfolios more profitably with mainstream or specialist lenders.

HMOs (Houses in Multiple Occupation)

Lender appetite is especially strong in this sector, particularly for professional and student HMOs where rent-to-loan coverage is robust. McPherson said with the right approach, landlords can access rates on par with standard BTL, delivering substantial savings and enhanced portfolio returns.

Multi-unit freehold blocks (MUFBs)

These remain a “lender sweet spot”, according to McPherson, especially where five or more self-contained flats sit under one title. “With the right rent roll and valuation evidence, we can often secure rates close to standard BTL terms, even at scale,” he added.

Rents are rising at the slowest pace in four years as tenant demand cools and affordability pressures start to bite. It is another blow for landlords, who have seen their profits eroded by tax hikes and more stringent regulations in recent years.

Average UK rents increased by 2.8% in the 12 months to April, according to the latest rental market report from property listing site Zoopla. It brings the average monthly payment to £1,287.

The rate of rental growth is less than half the 6.4% recorded last year. It also lags behind inflation, which came in at 3.5% in April.

“The slowdown is a result of weaker demand and ongoing affordability pressures, rather than an increase in rental supply,” said Richard Donnell, executive director of research at Zoopla.

Demand for rented homes is 16% lower than last year, but remains 60% above pre-pandemic levels.

Zoopla said lower levels of migration for work and study have contributed to the slowdown, having previously spiked in 2022/2023. Stability in mortgage rates and improved access to finance for first-time buyers have also played a role.

Rents may also be hitting an affordability ceiling, having soared after the pandemic when demand massively outstripped supply.

Higher property taxes

Investment properties used to offer attractive yields, but returns have been squeezed in recent years by higher taxes and more stringent regulation.

For example, landlords used to be able to deduct their mortgage interest payments from rental income when calculating their taxable income. This meant they enjoyed tax relief on this portion of the income, paid at their marginal rate.

Changes phased in between 2017 and 2020 replaced this system with a 20% tax credit – less generous for higher and additional-rate taxpayers.

Changes to stamp duty have also resulted in higher costs. Those purchasing a second home now face a 5% stamp duty surcharge following last year’s Autumn Budget, up from 3% previously.

The Renters’ Rights Bill, which is currently progressing through the House of Lords, will also introduce more stringent regulations, including banning no-fault evictions and restricting rent increases to once a year.

The aim is to protect tenants from unscrupulous landlords, but some argue that the new legislation will make it more difficult to get rid of tenants for legitimate reasons too.

Some landlords are selling up and quitting the sector as a result, resulting in a reduction in rental supply.

Is buy-to-let still worth it?

Although annual rental growth slowed to 2.8% in April, Zoopla expects it to pick up to 3-4% over 2025. Some areas are seeing faster growth than others. Belfast saw the biggest annual change in rents in April, up 11.5%. Rents in Leeds fell by 1.5%.

^{Source: Zoopla Rental Market Report. Data as of April 2025 (published in June).}

The yield you manage to extract will depend on the price of your property and the expenses you pay. Separate data from Rightmove found average rental yields in the UK were 6.3% in the first quarter of 2025, up 0.2% annually.

Rightmove data suggests landlords are generating the highest yields in the North East at 8.1%. Those in London are yielding the least, at 5.7%.

^{Source: Rightmove, Rental Trends Tracker, Q1 2025.}

These yields look relatively attractive, despite recent pressures on landlords, but it is important to weigh up whether you will be able to match these average levels once all costs are taken into consideration.

This could include mortgage costs, maintenance costs, letting agent fees, landlord insurance and more. If you have void periods between tenants where no rent is coming in, you will be operating at a loss too.

If you are managing the property yourself, you will also need to decide whether the hassle is worth it. For context, some multi-year fixed-rate savings accounts are currently yielding around 4.5% with a lot less effort and risk.

Cash doesn’t offer the prospect of capital appreciation in the same way as a property, of course, which could go up in value if house prices rise.

If you’re a sole trader or a landlord the way you’ll have to report your taxes is changing. HMRC is looking to shift more people to report their taxes online through a system called Making Tax Digital for income tax. Making Tax Digital is now live.

More than 860,000 sole traders and landlords – those earning more than £50,000 from self-employment and property – now have to use digital income tax reporting after changes that came in on 6 April.

Katie Hodge, senior tax manager at accountancy firm Albert Goodman, said: “The main thing that people need to know is that Making Tax Digital is based on a person’s income, not their profit. You might think you’re not eligible because you’re not making £50,000 profit, when actually you are because your qualifying income is over £50,000. This is for sole trade income and property income.”

Eventually all sole traders and buy to let landlords with self-employed income over £20,000 a year will have to report their income and expenses to HMRC digitally on a quarterly basis. Businesses registered for VAT are already using the system. Limited companies are not included in the switch over.

Craig Ogilvie, director of Making Tax Digital at HMRC, said: “A range of software is available and the system is straightforward and helps reduce errors. This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.

"Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January.”

This article explains what Making Tax Digital is, how it works and who it affects.

What is Making Tax Digital?

Making Tax Digital for income tax is a new way for sole traders and landlords to report their income and expenses to HMRC. 

Eligible sole traders and landlords, or your accountant if you have one, will need to use recognised software to keep digital records and send HMRC light-touch quarterly updates of your income and expenses. These are not extra tax returns.

The software you choose will need to work with Making Tax Digital in order to: 

• create, store and correct digital records of your self-employment and property income and expenses  
• send your quarterly updates to HMRC  
• submit your tax return and pay tax due by 31 January the following year

Who does Making Tax Digital apply to?

Approximately 2.9 million self-employed individuals and landlords with qualifying incomes over £20,000 will be affected by Making Tax Digital as it rolls out between 2026 and 2028.

Making Tax Digital is being implemented in stages and individuals must comply within the following deadlines based on their income:

• April 2026: Around 864,000 individuals with qualifying income over £50,000
• April 2027: 1,077,000 individuals with income between £30,000 and £50,000
• April 2028: Approximately 975,000 individuals with income between £20,000 and £30,000

HMRC will assess your gross income (income before you deduct expenses, also called your turnover). You should also check your qualifying income yourself. To assess your qualifying income for a tax year, HMRC will look at the self-assessment tax return you submitted in the previous tax year.

For example, your gross income could be:

£12,000 from rental income

£39,000 from self-employment income

In this example, your total qualifying income would be £51,000.

Once you start using Making Tax Digital, if your qualifying income drops below the relevant threshold for three tax years in a row, you can choose to opt out.

What software do I need to use for Making Tax Digital?

There are different types of software to help you use Making Tax Digital. You can get software that either creates digital records or connects to your existing records, such as those held in spreadsheets.

Depending on the type of software you choose, you can use either one compatible software product that does everything more than one product that works together, for example, one for creating digital records and another for submitting information to HMRC

If you use more than one product, you’ll need to make sure they can work together to meet all your Making Tax Digital requirements.

HMRC has a software finder tool to help you find compatible software that meets your needs as well as search for your existing software to check if it works with Making Tax Digital. You’ll be asked a few questions to get a personalised list of software options depending on what you need.

All the software listed on the tool has been through HMRC’s recognition process – but HMRC does not recommend any product or software provider.

“There is no software provided by HMRC to submit the Making Tax Digital updates but there are free options out there. You can use a spreadsheet even, but you need to use a separate bridging software to put it in the correct format,” said Hodge from Albert Goodman,

“Lots of transactions and payments that the software needs to process can slow things down. If possible, it is good practice to have a separate business account from your personal bank account, as streamlining your view of cash in and out will ultimately speed up the process and make it quicker for your tax software to process the transactions.”

What happens if I have to use Making Tax Digital in 2026?

Thousands of sole traders and landlords have already signed up for Making Tax Digital, with more than 12,000 quarterly updates successfully submitted through a voluntary testing programme, HMRC said.

The advice from HMRC is that those joining Making Tax Digital in April 2026 will still file their tax return for the 2025/2026 tax year in the usual way by 31 January 2027, as this covers the period before MTD begins. The first Making Tax Digital tax return, covering the 2026/2027 tax year, will be due by 31 January 2028.

To support the transition, the government said taxpayers joining Making Tax Digital in April 2026 will not receive penalty points for late quarterly updates, for the first 12 months.

Under the new system, penalty points will be given for each late submission, with a £200 penalty only applied once four points are reached. This means occasional slip-ups won't result in immediate fines.

HMRC is urging those in scope of Making Tax Digital for Income Tax to act now: read the guidance, choose software and sign up on gov.uk. Those who use a tax agent should speak to them about preparing.

Rents are growing at their lowest rate for three and a half years in a new blow for property investors.

Buy-to-let landlords have already been facing higher taxes and scaled back mortgage reliefs, as well as impending rental regulations - and now the profits from their property portfolio are at further risk.

Zoopla’s latest quarterly Rental Market Report found the average UK rent for a new let now stands at £1,284 per month annually.

Average UK rents for new rentals are three per cent higher annually, Zoopla said, down from 7.4% a year ago

This is the lowest rate of rental growth for three and a half years, which Zoopla blamed on worsening rental affordability rather than a major increase in the supply of homes to rent.

It follows warnings last year that tenants will eventually reach a limit of how much rent they can afford to and will be willing to pay.

But the supply and demand imbalance remains, which is keeping rents high.

Zoopla’s analysis found there are 11% more homes for rent while demand is 17% lower due to lower levels of immigration and improved demand from first-time buyers.

This mismatch between supply and demand remains a challenge with 12 renters currently chasing each home for rent, Zoopla said.

That is at least almost half the level of competition for rented homes recorded between 2022 and 2024, but is still double pre-pandemic levels.

“Rents are rising more slowly than average earnings, which will be welcome news for renters after three years where rents have risen rapidly,” says Richard Donnell, executive director at Zoopla.

“Affordability remains the primary constraint on rental inflation rather than increased supply and greater choice of homes for rent.”

Where rents are rising and falling

Demand for renting has cooled across all regions and countries of the UK over the past year, Zoopla said, helped by lower mortgage rates helping first-time buyers onto the property ladder.

Supply is also starting to increase across all areas except the West Midlands where rental supply remains lower than this time last year, the property website said.

The report shows rental inflation ranges from a low of 1.1% in London to 6.3% in the North East and 9% in Northern Ireland.

Rents are rising by the most in the more affordable cities where affordability is less of a constraint on rental growth, Zoopla claims.

The data shows rents in Blackburn were up 10.1% annually over the previous quarter, by 9.8% in Stoke and by 9.6% in Rochdale.

Will rents rise in 2025?

Zoopla said it expects demand for rented homes to continue to exceed available supply in 2025, keeping a steady upward pressure on rents, especially amid fears that Renters’ Rights Bill and the end of section 21 ‘no-fault’ eviction notices will force landlords out of the sector.

Zoopla is expecting rents to increase by three to four per cent over 2025 as slower growth in large cities is offset by faster growth in more affordable markets.

Donnell added: “The overall stock of private rented homes is unlikely to increase in size in the coming years due to rental reforms and policy changes impacting levels of new investment. It’s important that reforms in the private rented sector are designed and rolled out to minimise the negative impacts on available supply, which hit those with lower incomes hardest.”

This is a pattern that lettings agents are also seeing.

Greg Tsuman, director of lettings at Martyn Gerrard Estate Agents, said: “These figures match what we’re seeing on the ground with rental demand shifting to more affordable areas as the sharp rental increases led to many renters hitting their price ceiling and moving elsewhere.

“That said, it is likely that we could see another surge in rents in the second half of this year due to a confluence of factors. Some landlords are taking possession of their properties in advance of section 21 evictions being abolished, a large number of buy-to-let properties are coming up for remortgage at higher rates and seasonal demand picks up around this time as well.

"These will all add upward pressure on rental prices, which, for landlords, means that the longer-term stability of buy-to-let investment remains intact.”

Stamp duty land tax (SDLT) is a tax you have to pay when buying property or land over a certain price in England and Northern Ireland.

The rates you pay differ depending on the value of the property, as well as what it is going to be used for.

But the rules are slightly different for additional homeowners, meaning landlords can face an extra tax burden on their buy-to-let properties.

Here’s everything you need to know, and how land tax is applied on BTL in Wales and Scotland.

How much is stamp duty on a buy-to-let property?

There are different property tax rules and rates in different parts of the UK.

How much stamp duty do you pay on a buy-to-let in England and Northern Ireland?

Stamp duty on a BTL property is higher if you already own a home as you need to pay a surcharge known as the 'Higher Rates on Additional Dwellings'.

This means you pay 5% above the standard stamp duty rate, though you won't pay the extra 5% if you only own one property. The surcharge was first introduced in 2016 at the level of 3% and was increased to 5% in October 2024 by chancellor Rachel Reeves.

Below are the current rates of stamp duty:

Credit: Gov.uk

While standard stamp duty rates are tiered, the 5% surcharge on buy-to-lets is applied to the whole purchase price of the property.

As an example, if you are buying a second home with a purchase price of £300,000, you would pay £20,000 in stamp duty.

You would pay 5% on the first £125,000 (£6,250), 7% above £125,000 and up to £250,000 (£8,750) and 10% on the final £50,000 (£5,000).

Below are the current stamp duty rates for second homes:

Credit: Gov.uk

How much stamp duty do you pay on a buy-to-let in Wales?

In Wales, stamp duty was replaced by land transaction tax (LTT) in 2018. If you are buying a property and you already own one or more residential properties, then you must pay the higher rate of LTT.

You pay the lower rate of LLT if you are buying a home and it is your main residence. These rates are:

Credit: Gov.wales

These are the higher LTT rates you’ll pay if you’re buying a second home:

Credit: Gov.wales

As an example, on a second home bought in Wales for £350,000, you would pay £24,950 in LTT. This is because the first portion, up to £180,000, incurs a £9,000 tax bill. £5,950 applies to the portion between £180,000 and £250,000, and £10,000 is incurred on the portion from £250,000 to £350,000.

How much is stamp duty on a buy-to-let in Scotland?

Land and buildings transaction tax (LBTT) replaced UK stamp duty in Scotland from April 2015 and is charged on properties worth more than £145,000.

The portion between £145,001 and £250,000 is taxed at 2%, between £250,001 and £325,000 is taxed at 5%, the portion between £325,001 and £750,000 is charged at 10% and anything over that is taxed at 12%.

For landlords, Scotland has its own surcharge called an additional dwelling supplement (ADS), which is charged on top of LBTT when a buy-to-let (or second) property is purchased.

In Scotland, the ADS is charged at 8% on the whole purchase price of the property.

As an example, on a £300,000 second home, you would pay a total of £28,600 in LBTT. You’d pay £4,600 in LBTT and £24,000 on the ADS.

Can I claim back stamp duty on buy-to-let property?

If the property remains a buy-to-let then the stamp duty is due and you are not eligible for a refund.

If you sell your main residence or second home within three years of buying the buy-to-let home, and now reside in that buy-to-let property, you could be eligible for a stamp duty refund of the surcharge you paid.

You can get help on this from an accountant.

In Wales, you can claim back LTT paid at the higher rate if you sold your main residence within three years of buying the second property.

In Scotland, you can claim a refund of the ADS if you meet three criteria: you sold your previous property within 36 months of buying the second one, the property that was sold was your main residence in the 36 month period and you have lived in the property you paid ADS on as your main residence.

Are any properties exempt from buy-to-let surcharges?

In England and Wales, if you inherit or are gifted a buy-to-let property then stamp duty doesn’t apply.

Surcharges are charged on all buy-to-let property purchases, though no stamp duty is payable on caravans, houseboats or mobile homes.

In Wales, the higher rate of LTT doesn’t apply if you start using a second home as your main residence and have sold the last main home before buying the second one.

You also pay no LTT on a second property worth less than £40,000 or if it’s a caravan, houseboat or mobile home.

In Scotland, inherited or gifted second homes don’t have to pay the ADS, nor do second homes bought for less than £40,000.

Do first-time buyers have to pay additional stamp duty for a buy-to-let?

As long as you've never owned a property before and are purchasing a buy-to-let home, you won't have to pay the additional dwellings extra stamp duty rate. Instead you will pay standard home buyer rates.

However, since you’re purchasing a buy-to-let, you won't qualify for first-time buyer stamp duty relief, which only applies if you intend to live in the property. This relief means first-time buyers in England and Northern Ireland pay no stamp duty on property purchases up to £300,000.

In Scotland, first-time buyers benefit from no LBTT on properties up to £175,000, but only if you intend on living in the property. So, if you bought a home for a BTL, you wouldn’t get this relief. No ADS would be owed on the property as it only applies if you own more than one dwelling.

In Wales, a first-time buyer would not pay the higher rate of LTT on a buy-to-let as it would be their sole property.

When do you need to pay stamp duty?

HMRC rules for England and Northern Ireland state that stamp duty must be paid within 14 days of your property or land purchase to avoid any extra charges and interest.

In Wales you pay the Welsh Revenue Authority within 30 days of the completion of the purchase. And in Scotland you have 30 days after buying your property to submit a Land and Buildings Transaction Tax return and pay any tax due.

Usually buyers – in any region – will pay the money to a conveyancing solicitor in advance of the completion date who will take care of the payment to the relevant body. There will be penalties for paying late.

Do limited companies pay stamp duty on buy-to-let?

There are no stamp duty exemptions for those purchasing a buy-to-let property via a limited company. The buy-to-let surcharge still applies.

In Wales, you have to pay the higher rate of LTT if you own a limited company. In Scotland, limited companies have to pay ADS.

Can a mortgage help cover stamp duty costs?

It is possible to add stamp duty to your mortgage, though this may vary between lenders.

If you take this route, it's important to understand that this will incur interest over the duration of the mortgage term and end up costing far more than the original tax bill.

It will also affect your loan-to-value ratio (LTV) which could mean you end up paying higher interest rates for your entire mortgage as, broadly, the higher your LTV, the higher the mortgage rate you pay.

For example, if adding the stamp duty bill takes you from a 75% LTV to an 80% LTV, you could end up with a more expensive mortgage.

The cost of running a buy-to-let portfolio is set to rise further after the government resurrected plans to make rental properties more energy efficient.

Landlords have already been hit with higher mortgage rates and lower rental yields amid slowing house price growth as well as new rental regulations that will ban no-fault evictions.

Now, property investors are also facing the challenge of boosting the energy efficiency of their rental properties by 2030.

A consultation that ended earlier this month suggests that from 2030, all rental homes will need a minimum energy performance certificate (EPC) rating of C, up from the current requirement for a score of E.

The aim is to bring down energy bills for tenants by making homes greener.

The government says the average cost for a landlord to upgrade their rental properties will be between £6,100 and £6,800 but other research suggests the figure will be higher.

Energy data firm epIMS said the average landlord is thought to have eight properties within their portfolio and with the average cost to bring a sub-C rated home up to compliance coming in at £8,000, that’s a potential required investment cost of £64,000 over the next five years.

Craig Cooper, chief operating officer at epIMS, said: “The worry is that forcing a mandatory EPC C rating on the nation’s landlords could cause more to exit the sector, exacerbating the current rental crisis in the process.”

The National Residential Landlords Association (NRLA) added that funding may be needed to support landlords to make the required changes.

Ben Beadle, chief Executive of the NRLA, said: “We all want to see rented homes as energy efficient as possible, but that will require a realistic plan to achieve this.

“The chronic shortage of tradespeople to carry out energy efficiency works needs to be addressed, alongside a targeted financial package to support investments in the work required as called for by the Committee on Fuel Poverty and Citizens Advice.

“Importantly a realistic timetable is needed if the 2.5 million private rented homes, which will not currently meet the government’s proposed standards, are to be improved.”

There are also calls for a more phased approach for new and existing tenancies.

Paragon Bank has suggested that the 2030 target should be for new tenancies, with 2033 given as an aim for extended tenancies and 2035 for all.

Louisa Sedgwick, managing director of mortgages for Paragon Bank, said: “Increasing the delivery timeline and maintaining flexible exemptions allows for a smoother transition without exacerbating the demand and supply imbalance, which is already expected to grow due to forecast population growth and demographic changes.”

What is an energy performance certificate?

An energy performance certificate gives a home a rating from A to G based on how energy efficient it is.

The higher the rating, the lower the energy bills are likely to be.

All homes listed for sale or rent must have a valid EPC, giving potential buyers and tenants an idea of how much the gas and electricity bills will be at a property.

Currently, homes rented out by landlords must have a minimum EPC rating of E.

Plans to raise the minimum to C by 2030 were scrapped by former prime minister Rishi Sunak in October 2023 but the Labour government did vow to resurrect them.

The argument is that a higher EPC rating will help bring bills down for tenants, while there is also research that it can boost house prices.

You can search for EPCs via the "find an energy certificate" tool on the government website.

How can landlords boost their rental property’s EPC rating?

The Department for Energy Security and Net Zero (DESNZ) said landlords would have a choice over how to meet energy efficiency standards.

This will require them to meet a fabric standard through installing measures such as loft insulation, cavity wall insulation or double glazing, before moving on to a range of other options including batteries, solar panels and smart meters.

There will be a maximum cap of £15,000 per property for landlords, meaning they wouldn't be required to spend more than this to bring their property up to the standards. Support may be available from the Boiler Upgrade Scheme and Warm Homes: Local Grant.

Some landlords could get an affordability exemption, which would lower the cost cap to £10,000 and could be applied based on lower rents or council tax band.

It is estimated that over 2.5 million privately rented properties currently hold an EPC rating of below a C so there is lots of work for landlords to do.

However, Cooper suggested that it may be easier than some think.

He said: “An EPC rating is actually compiled using a points based system and so achieving a C rating could be well within their reach by making just a few small improvements to their rental properties.”

For example, a score of between 92-100 SAP points gives a rating of A, 81-91 points gives a rating of B, and 69-80 points gives a rating of C.

Cooper added: “This is important knowledge for landlords because it means that a property with a rating of D could be just one point, and therefore one minor improvement, away from upgrading to a C.

“The good news is that there are a raft of smaller, more cost-effective changes that can be made to a property which are likely to boost an EPC rating, such as installing PV panels over internal or external wall insulation.

"For those who are looking to meet that all-important C requirement, accredited energy assessors are best qualified to advise on what will and won’t work, to avoid wasting money on costly improvements.”

The average advertised rent of properties coming to market outside of London has fallen for the first time since 2019, dropping by 0.2% to £1,341 per calendar month.

This is according to Rightmove, which found that supply in the rental market has increased, while demand has dropped, helping push down prices.

However, rents in the capital have continued to rise, albeit slowly. Average London rents increased 0.1% over the past quarter, reaching a 13th consecutive quarterly record of £2,695 per calendar month.

The news that rents are dropping or at least slowing will be cheered by hard-pressed renters who have faced tough competition to secure a home and then paid soaring rents over the past few years.

However, buy-to-let landlords could be worried by the figures. They already face a challenging time with tax relief restrictions, lower capital gains tax allowances, and high mortgage rates, as well as new rules like the Renters' Rights Bill.

Any landlords wanting to buy further investment properties also face a 5% stamp duty surcharge, as announced in last year’s Autumn Budget.

We delve into the Rightmove data and ask what it means for buy-to-let landlords.

Rental market cools

Rents for newly-listed homes outside London are still 4.7% higher than this time last year, but they fell 0.2% over the last quarter. It brings to an end many months of new record high rents, which rocketed during the pandemic.

Part of the reason is increased supply in the rental market. The number of available rental properties is now 13% higher than last January. Supply has increased the most in the North East, and the least in Wales, according to Rightmove.

In addition, the number of prospective tenants looking to move has dropped by 16% versus last year.

Some demand may have transitioned to the sales market, particularly first-time buyers, helped by lowering mortgage rates and higher average wages.

Estate agents report that some tenants are choosing to stay put rather than move due to costs, and while there is evidence of some buy-to-let landlords choosing to exit the market, there are also signs that other, perhaps larger, landlords are continuing to invest.

Rightmove notes that there are currently no major signs of the upcoming Renters’ Rights Bill affecting rental market dynamics.

It all means that the balance of supply and demand has improved.

Rightmove’s property expert Colleen Babcock comments: “While new tenants are still paying more than they were at this time last year, the pace of growth continues to slow.”

Alex Bloxham, head of residential lettings at the estate agent Bidwells, says the data “represents positive news for renters”, adding: “We're seeing a cooling of what has been a ferociously hot rental market over the last year, where tenants have endured intense competition and consistent rental inflation.

"These figures suggest landlords are continuing to invest in their buy-to-let portfolios while more tenants are choosing to stay put, likely due to continued macroeconomic uncertainty and the upfront costs involved in relocating.”

Where does Rightmove's rental data leave landlords?

While average rents have dipped slightly, property experts say the rental market remains buoyant, and in some areas it’s “very hot”.

Demand is robust: the average number of applications per rental property stands at 10 - double the pre-pandemic average - according to Rightmove.

The property website says the amount of new properties coming into the rental market is stable compared with last year, suggesting neither a sudden influx of newly advertised properties, nor a mass exodus of landlords.

Babcock says that “agents on the ground still tell us that the market is very hot, and some areas have improved more than others when it comes to the supply and demand balance”.

John Baybut, managing director at Berkeley Shaw Real Estate in Liverpool, comments: “Demand is generally pretty strong and the market is still busier than before the pandemic. Tenants are paying very high rents, so with more supply on the market now, some are being more ‘choosey’. Some have also decided the costs of moving are too expensive and have decided to stay put.”

Baybut’s advice for landlords is to be careful to price accurately. That means looking closely at current market rents, as well as their own affordability pressures like their mortgage rate.

He says: “Landlords need to work closely with experts to set the right price and keep their home occupied in the current market, reducing the risk of void periods.”

Landlords that have chosen to continue investing in the property market do potentially have two things to look forward to this year: cheaper mortgage deals, and higher house prices.

Buy-to-let mortgage rates have increased in recent months - the average two-year fix is currently 5.42%, according to Moneyfacts, compared to 5.34% at the end of 2024 - but are predicted to fall this year.

The Bank of England is forecast to cut interest rates twice this year, which should push mortgage prices downwards.

Meanwhile, property prices are expected to grow by as much as 4% this year, which could increase a buy-to-let investor’s return when they come to sell a rental property.

The stamp duty payable on the purchase of second homes will rise by two percentage points, after chancellor Rachel Reeves announced the measure in her Autumn Budget. Those buying second homes already pay a surcharge of 3%, but this is set to rise to 5% from tomorrow.

The government says the measure will support first-time buyers and those purchasing a main residence, giving them “a comparative advantage over those purchasing additional property”.

It expects the number of property transactions among these groups to rise by 130,000 over the next five years as a result of the change.

However, critics say the policy sounds another death knell for buy-to-let landlords, who have already been hit in recent years by scaled back tax reliefs and higher stamp duty rates.

The knock-on effect could also be negative for renters, with landlords expected to pass the costs on to tenants in the form of higher rents.

“This is another nail in the coffin of buy-to-let,” says Craig Fish, director at Lodestone Mortgages & Protection. “Transactions in process are now at real risk as investors may well pull out and this will have a negative impact on any property chains where a buy-to-let is involved.”

Although the new rules will kick in from tomorrow, 31 October, those who exchanged contracts prior to this date will not be affected by the rate increase.

Stamp duty hike was unexpected

The move was unexpected in a Budget that otherwise contained relatively few ‘rabbits out of hats’. Many landlords were expecting capital gains tax to go up, but not stamp duty.

A large number of former rental properties were listed for sale in the lead-up to the Budget as owners tried to cash in capital gains before the fiscal event. However, ultimately, it wasn’t this particular tax they needed to worry about.

Although Reeves hiked the main capital gains tax rates, she left the residential property rates untouched.

This change comes at a time when many prospective buyers are already staring down the barrel of a higher stamp duty bill.

Stamp duty thresholds were temporarily lowered in 2022, but this relief is set to come to an end in April 2025. At this point, the tax-free threshold will revert from £250,000 to £125,000 (and from £425,000 to £300,000 for first-time buyers).

It is worth pointing out that the stamp duty surcharge means those buying a second home do not get any portion of the property tax-free, even under current rules. The minimum they pay is 3%, rising to 5% from tomorrow (31 October).

Stamp duty hike could hurt tenants as well as landlords

Critics have argued that the change in policy will cause further damage in an already broken rental market. Rents are already at a record high and there is a distinct lack of housing supply.

Recent data from Zoopla shows there are an average 21 tenants competing for each rental property – more than twice the pre-pandemic average.

Official data from the Office for National Statistics (ONS) also shows that the average rent in England is currently £1,336 per month, up 8.5% compared to a year ago. This rises to £2,145 in London.

“Housing shortages are not due to landlords buying all the property, but the lack of development over the long term,” says Justin Moy, managing director at EHF Mortgages. “But those landlords are the life of social housing needs, so why make it worse?”

The government has committed to building 1.5 million new homes over the course of this parliament. In theory, an increase in supply should help boost affordability for those looking to buy. But the private rental sector will remain an important cornerstone of the UK housing market – and it appears to be at breaking point with swathes of landlords selling up.

Figures released by Rightmove in September showed that almost a fifth of homes that are currently up for sale used to be rented out. This is up from 8% in 2010 and well above the five-year average of 14%.

New stamp duty rates on second homes

From 31 October, the following stamp duty rates will apply for second homes, buy-to-let residential properties and companies purchasing residential property:

The UK is the ninth-worst country for property investment due to high taxes and rising transaction costs, according to a study that further highlights the pressure on Britain’s buy-to-let sector.

Removals firm 1st Move International analysed various factors, including rental yields and property taxes, to identify the best and worst property markets in terms of financial returns.

The UK came out as ninth-worst from the study, while central and eastern European countries topped the list. 

The company said: “The UK rental market is currently in crisis, with average rental costs skyrocketing by 8.4%. Coupled with high taxes on landlords, the UK has lost its attractiveness for property investment.”

The UK was given an investment score of 4.13 out of 10. The removals firm said that, although the country “boasts a relatively strong rental profit of 7.03% per annum”, high tax rates hinder its appeal to investors. 

“The income tax on rent stands at a staggering 47%, while buying costs are also significant at 15.10%,” it said. 

Belgium was the worst country for property investment, with a score of 2.90 out of 10. France was the second-worst, with a score of 3.21.

At the other end of the scale, Lithuania was the best country for property investment, with a score of 7.1, followed by Estonia at 7.04. Ireland was fourth with 6.55.

Landlords exit the buy-to-let sector

The findings come as Rightmove figures show almost a fifth (18%) of homes currently being put up for sale used to be rented out. This is up from 8% in 2010 and well above the five-year average (14%). 

London has had the biggest lettings-to-sales turnover, with 29% of the properties currently on offer having previously been available to rent, the property listing website found. 

The numbers follow concerns that the withdrawal of mortgage interest relief and the threat of a capital gains tax raid in this month’s Budget could increase the number of landlords quitting the rental market. The National Residential Landlords Association has urged Labour to bring in “pro-growth tax plans” to ensure there is enough stock to house renters.

Is buy-to-let still worth it?

Landlords have faced plenty of pressure in recent years, with extra stamp duty charges on buy-to-let purchases and restrictions on mortgage interest relief. New regulations in the Renters’ Rights Bill will also make It harder to evict tenants. 

The average number of tenant enquiries for each rental property available has fallen to 15, down from 23 at this time last year, Rightmove said.

But it is still almost double the eight recorded in 2019. Meanwhile the number of available rental properties is now 13% higher than last year, though still 27% below 2019, which is keeping rental growth down.

A fifth of rental properties are currently seeing a reduction in the advertised rental price before finding a tenant, Rightmove said. This compares with 16% last year and is the highest figure at this time of year since 2020.  

“We are seeing some landlords choosing to exit the market with potential tax changes and stricter energy performance certificate regulations as additional factors in landlords’ decision-making,” says Rightmove’s director of property science Tim Bannister.

“With rental supply under strain, incentivising landlords to invest in energy-efficient upgrades or offering tax relief could help maintain rental supply and, ultimately, ease affordability pressures for tenants." 

However, new data from Foxtons shows that rental demand in August continued to reach record highs for 2024, with an average of 23 new renters per new instruction in London – up 23% on a monthly basis.

Landlords have been hit by falling rental growth in recent years but there are suggestions that buy-to-let investors could supercharge their portfolio by getting on board with electric vehicles (EVs).

Many of the perks of buy-to-let have been reduced in recent years due to restrictions on mortgage interest relief and higher stamp duty charges on additional property purchases.

Lower mortgage rates in the residential market have also helped more renters get on the property ladder, while those still renting have hit a limit on how much they are willing to pay amid the cost-of-living crisis.

This has kept rental growth low.

But there are suggestions that landlords could command higher rent by offering extra amenities such as an electric car charging point, especially with the government set to resurrect plans to ban sales of new petrol and diesel cars from 2030.

Property website Rightmove has already observed an increase in property listings that feature a car charger and the National Association of Property Buyers suggests an electric car charger can add £5,000 to a property price.

“We would encourage more landlords to start installing EV chargers at their properties, it’s a smart move to help future-proof their investment,” says Greg Wilson, chief executive of Quotezone, an insurance comparison website.

“It’s also a win-win for both renters and landlords, tenants get convenient and cost-effective charging options, while landlords are able to increase the value of their property by up to £5,000.”

He suggests it is an attractive selling point to prospective tenants.

“Providing these young EV drivers with rental options which cater to the needs of their vehicle is a great way to encourage and support efforts to reduce carbon emissions, entice new tenants, boost house price value and keep current tenants happy,” he says.

Alexandra Crocker, head of lettings at agent John D Wood & Co. in Cobham, says she has noticed more and more tenants asking about EV chargers.

She says: “We've had instances where we’ve had to install them in properties because tenants say they can't live there without one, and it's often agreed as part of the deal. It's not just limited to houses either; even new-build flats are seeing this kind of demand. It's quickly becoming an expectation.”

Can landlords charge higher rent for an electric charger?

With a large supply and demand imbalance, anything that helps a landlord stand out is beneficial to attract decent tenants and even justify higher rents.

Crocker says having an electric vehicle charger may not automatically mean a landlord can charge higher rents but it does make a property more lettable.

She adds: “It all depends on where you're based.

“In places like Surrey, for example, tenants are willing to pay more for the convenience of having a charger at home. People really value the ease of charging their car, and it's becoming something they actively look for when choosing a rental property.

“Without it, some potential tenants might rule a property out altogether. In the long run, though, I think we’re heading in that direction. As EVs become more common, having a charger could definitely become a factor that adds value and helps properties stand out."

Marc von Grundherr, director of estate agency brand Benham and Reeves, says parking has always been a hot commodity in the rental market and charging points have added a new dynamic to this. 

“With electric vehicles becoming more prominent we are seeing higher demand, particularly amongst older demographics, and many tenants are placing an on-site charging point quite high up the priority list,” he says.

“During this first six months of this year, we’ve seen an approximate increase of 40% in tenant enquiries specifically stating the need for an EV charging point versus the same time period last year.”

He says this hasn’t quite translated into a rental premium as of yet though.

“Rental properties that come fit with parking already command higher market rents than those without and so currently this premium is also including the presence of an EV charging point,” he adds.

“That said, if tenant demand continues to climb, it’s only a matter of time before properties with parking and an EV charging point boats higher rental premium than properties with parking but without one."

How to add an electric car charger to your rental property

Grants for homeowners to install electric car chargers are no longer available but landlords and their tenants can still benefit.

A typical car charger costs around £1,000 to install but landlords can get an EV chargepoint grant that gives you money off the installation.

You can get either £350 or 75% off the cost to buy and install a socket, whichever amount is lower.

Each financial year, you can get up to 200 grants for residential properties.

This is only available if you are a residential landlord so it can’t be used on a holiday let or if you are living in the property.

The grant can only be used if there is a clearly defined parking space and must be installed by someone from the Office for Zero Emission Vehicles.

Some energy companies such as British Gas and Scottish Power also have tariffs that offer electric car charger installation.

Wilson adds: “Just remember to keep insurance providers up to speed with any changes or upgrades to the property – invalid or outdated information can actually void insurance policies, leaving homeowners, renters or landlords unprotected.”

Rents outside of London have hit a new record and landlords can still benefit from high levels of tenant demand even amid reform of the rental sector, research suggests.

Landlords may be reconsidering the benefits of buy-to-let amid the Renters’ Rights Bill and clampdowns on tax reliefs when it comes to property investing.

The cost of living crisis and lower mortgage rates have also put a dent in rental growth.

But Rightmove’s latest Demand Tracker has revealed there are some parts of the country where landlord portfolios can benefit from a large supply and demand imbalance.

Analysis by the property website, based on millions of local data points across more than 250 local authorities, found that Wrexham is the busiest rental market.

While the average number of enquiries across the country is 19 per rental home, some parts of the UK are seeing up to 50 or more in some cases.

This is helping landlords justify higher rents.

Average advertised rents outside London are now a record £1,349 per calendar month and 5% higher than this time last year, Rightmove said.

Angharad Trueman, president of lettings agent trade body ARLA Propertymark, suggests this is due to people looking further afield for places to live.

She says: “With the homeworking revolution now a more widespread part of life, it has given people the flexibility to look further afield to locations that bring additional benefits to their home life such as easier access to countryside or the ability dwell in a more substantial property due to typically lower rental prices away from busy metropolitan areas.”

The areas with the highest level of tenant demand

Despite mortgage rates falling, there are still plenty of people who struggle to get on the property ladder or choose the flexibility of renting.

Tenants have been hit with rent rises due to a lack of supply, which has been exacerbated by landlords exiting buy-to-let amid rising costs and fears of tax rises in the upcoming Budget.

Wrexham has been identified as a tenant demand hotspot by Rightmove, with rents at £967 per month on average.

An average letting agent in Wrexham is currently receiving 54 enquiries for every rental home that comes onto the market, Rightmove said.

Glasgow is second on the list, with an average of 52 enquiries being sent to letting agents per available rental property and typical monthly rents of £1,078.

Bristol is third, with an average of 51 enquiries per property and average rents of £1,658.

Is buy-to-let worth it?

Tax changes and a potential ban on ‘no-fault’ evictions are putting extra pressure on landlords, making many consider if buy-to-let is worth the effort.

While asking rents continue to rise, they are down from the peak annual rate of growth of 12% in 2022 and are at the slowest rate since 2021, according to Rightmove.

Additionally, the number of tenants looking for a new home has dropped by 16% compared to last year, and at the same time, the overall number of available homes on the market has improved by 8%.

That could put further pressure on rental growth. Plus, rental supply remains an issue. The number of tenants looking for a home is still 17% ahead of the more normal pre-pandemic 2019 market, while the number of available rental homes is still 32% behind the same period in 2019.

“Whilst at a high-level there has been an easing in the rental market compared with last year, from speaking with agents, we know that many local markets are yet to feel the effect from these improvements,” says Tim Bannister, Rightmove’s property expert.

“At the same time, prospective tenants are still likely to be experiencing a very hot and competitive market. To be receiving upwards of 50 enquiries per available rental property in some local areas is an astonishing figure, which goes to show the significant amount of work still to be done to improve the balance of supply and demand across different areas of Great Britain.”

Landlords could be forced to improve the energy efficiency score of their portfolios after the government announced it would be reviving the Conservatives’ Energy Performance Certificate (EPC) plans.

Sir Keir Starmer’s administration will push for a new law that would require rented accommodation to be rated EPC C or above. The move resurrects plans unveiled by the last government, which were dropped after Tory backbenchers rebelled against them.

EPCs have been a controversial topic in recent years, particularly given their accuracy has been questioned. However, having a high EPC rating has been shown to inflate house prices.

It comes as the key elements of the Renters Reform Bill - which was lost when Rishi Sunak called the general election - have been brought back to Parliament in the form of Labour’s Renters’ Rights Bill. While at least some landlords appear to have accepted that the reforms will be put in place, many have already been abandoning the buy-to-let sector amid high mortgage rates and poor returns. Rents are also beginning to hit an affordability limit - particularly in the south of England.

Government announces ‘biggest ever’ energy efficiency reforms

Coming in the wake of Energy Secretary Ed Miliband’s speech at the 2024 Labour Party Conference, the government has said it will launch a consultation on minimum energy efficiency standards in rented homes “by the end of the year”. This will form part of its ‘Warm Homes Plan’ which aims to make all homes “cleaner and cheaper to run” by boosting the rollout of insulation, solar panels and heat pumps.

Should the proposals proceed as planned - possibly as soon as the new year - private and social landlords will have to improve their EPC score to grade C or above by 2030. Under current rules, an ‘E’ score is the legal minimum in the private rented sector, while there are no minimum requirements for social housing.

Miliband said these requirements were “below decent standards” and promised “warmer homes, lower bills” for tenants. The government claimed its plans would provide “the biggest potential boost to home energy standards in history” and could lift more than one million households out of fuel poverty.

Buy-to-let sector: EPC rules ‘must be realistic’

Reacting to the announcement, the buy-to-let sector has urged the government to give it enough time and adequate support to reach the desired energy efficiency standards.

Head of policy and campaigns at estate agents professional body Propertymark, Timothy Douglas, said: “Property agents want to see more energy-efficient homes, but new rules and requirements must be realistic and achievable. Furthermore, without providing landlords with incentives and access to sustained funding, it is unlikely that energy efficiency targets for the private rented sector and a reduction in emissions across the property sector will be met.”

Douglas added: “The consultation process must shine a light on the different types of property across the rented sector to ensure the targets, guidance and funding prioritise the most difficult to decarbonise.”

The National Residential Landlords Association (NRLA) pointed out that more than 31% of private rented properties were built before 1919. It added that these homes were “some of the oldest, and hardest to improve, properties” in the UK, and called on the government to set out a “clear and comprehensive plan” for improving energy efficiency.

Its policy director, Chris Norris, said: “The NRLA wants to see all rented properties become as energy efficient as possible. The sector needs a clear trajectory setting out what will be expected of it and by when. This plan must also ensure sufficient numbers of tradespeople are in place to undertake the work that will be required.

“Alongside this, as the Committee on Fuel Poverty has warned, is the need for a financial package to support investment in energy efficiency measures. At present, the private rented sector is the only housing tenure without a bespoke package to support work to upgrade homes.”

The NRLA also pointed out that many of the landlords it represents had already achieved the government’s aims. It highlighted official data from 2022, which showed almost 45% of privately rented homes in England had an EPC rating of at least a C - more than double the percentage recorded in 2012.

Cost of EPC ratings target could be £23.4bn, Rightmove finds

According to report by Rightmove, which was published on 4 October, around 2.9 million homes will need to have their energy efficiency improved to meet the government's proposed target.

By taking recommended energy efficiency improvements from the EPC register and combining them with its whole-of-market data, the property listing website said it had found that the average retrofit bill per property would come to £8,074. At a nationwide level, this would lead to a bill of £23.4 billion, it said.

Reacting to the figures, Rightmove's director of property science, Tim Bannister, said:  "It’s clear from our analysis that more needs to be done to help the mass market transition to greener homes, especially those living in homes worth under £400,000.

“In the rental market, through discussions with agents and our research, we know landlords want to provide comfortable, energy-efficient homes, but green upgrades can be costly. For landlords of lower-value properties, the financial returns may not always justify the investment.

“Now that the government has confirmed there will be a consultation on raising the minimum energy efficiency standards in rental homes, we look forward to seeing much needed clarity, and ideally support, for landlords, which in turn should benefit tenants over the medium to long term.”

Rightmove has revealed the most expensive cities outside of London for renters, with the south of England taking up most of the top 10.

The property listing website found St Albans, Hertfordshire came out on top as the priciest place to rent out a home in Great Britain. With typical monthly advertised rents in the city coming in at £2,307, putting its lets 71% above the UK’s average (£1,349 per calendar month).

At the other end of the scale, Carlisle was the cheapest city to rent in with its typical monthly rent coming in at £791 - 41% below the national average. But despite coming in cheaper, the cost of lettings in the North West border city has soared significantly since 2019, rising 47% in cash terms.

It comes as rents have skyrocketed since Covid amid record inflation and an exodus of landlords from the sector, which has led to an imbalance between supply and demand. According to major lettings agency Hamptons, northern lets have been seeing the strongest growth over the past year, closing the gap on the traditionally more expensive regions in the south of England.

The Labour government has revealed how it plans to regulate the sector, with its Renters Rights Bill currently making its way through Parliament. The law aims to give tenants greater rights, and is similar to the Renters Reform Bill the Conservative government was seeking to bring into law before the general election.

Most expensive and cheapest cities to rent in, according to Rightmove

To draw up its list of the most expensive and cheapest places to rent in Great Britain, Rightmove analysed advertised lets in 50 cities across England, Scotland and Wales during the month of August. This research included all property sizes, and was then compared to data from August 2019. Here are its findings:

Rightmove findings show ‘regional divide’ in lettings market

Commenting on the results of the analysis, Rightmove’s property expert Tim Bannister said: “The rental divide across Great Britain is clear, with an average difference of just over £1,500 between the most expensive and cheapest cities. Many of these cities have seen rental growth of over 40% over the past five years."

Bannister added that the findings would particularly affect students, who are just beginning a new academic year. He said: "It’s likely to be a significant consideration when students are thinking about where to study, and those who have already graduated working out if they can afford to stay in that city and find a job.”

Letting agents trade body Propertymark urged students to "do their research" on the area surrounding the university they're studying or thinking of studying at to assess affordability. It also suggested they use accredited agencies to ensure they get the best possible service.

It comes after a report released in May warned that parents may need to contribute a five-figure sum each year to help their children with university living costs. For those who are looking into how to support their child at university, we have rounded up the best student bank accounts.

Tenant demand remains high, giving landlords a boost as they prepare for reforms to the rental market.

The government revealed its long-awaited Renters’ Rights Bill last week, signalling the end of ‘no-fault evictions’ and changing the rules around tenancies.

It is another regulatory change for landlords who have already been hit with tax relief restrictions on buy-to-let and extra stamp duty charges on additional property purchases.

Despite this, high house prices continue to keep many people in the rental sector, providing plenty of demand for landlords holding on to their buy-to-let portfolio.

New data from Foxtons shows that rental demand in August continued to reach record highs for 2024, with an average of 23 new renters per new instruction in London – up 23% on a monthly basis.

Meanwhile, Office for National Statistics (ONS) data released today also shows average UK private rents increased by 8.4% in the 12 months to August 2024, down from 8.6%.

It marks a traditionally busy period for the rental market as students move to new accommodation ahead of the academic year while families may move to get closer to a school catchment area.

“July and August were the busiest months this year, as you’d expect, with August seeing a remarkable 23% month-on-month increase in renters per new instruction,” says Gareth Atkins, managing director of lettings at Foxtons.

“As we approach the fourth quarter, which is usually a quieter period, landlords should make the most of this month's market activity to secure quality tenants. This month goes remarkably fast, and strategic marketing now could make a significant difference over the next year.”

Rental market demand

London has always been a popular location for renters as high house prices can make it harder to buy a property.

However, falling mortgage rates have meant buying is cheaper than renting again, while the cost of living crisis has meant many tenants have reached a limit of what they can afford to pay.

These factors have hit rental growth.

But a lack of supply in London, partly due to landlords exiting amid lower rents and higher costs, is keeping demand high for those sticking with buy-to-let.

Location remains an important factor though.

Tenant demand in central London was up 15% annually, according to Foxtons, but fell 13% in the south and by 20% in the west of the capital.

In some good news for landlords, applicant budgets remain 2% higher year-on-year, the highest seen of any year.

One-bed flats have seen the highest increase year to date with a 5% increase, now sitting at an average of £472 per month, according to Foxtons.

Is buy-to-let still worth it?

Sales of former rental homes appear to be on the rise as landlords fear tax changes in the October Budget and the Renters’ Reform Bill.

Buy-to-let investors have also been hit with higher mortgage rates and restrictions on tax relief, denting landlord profits.

They also need to price their rent competitively to attract tenants who are struggling with high bills.

Foxtons’ data echoes these concerns.

The number of new listings coming to the market was up 7% year on year, but there was a 13% decrease month-on-month.

The lack of supply may be good news for remaining landlords though.

Even if rental yields are slowing, rental growth remains high.

ONS data shows average rents increased 8.5% annually in England and Wales to £1,327 and £752 respectively and rose 7.6% in Scotland £969.

Rent inflation was highest in London at 9.6% and lowest in the South West at 6.4%, suggesting landlords can still get inflation-beating returns on buy-to-let.

“Rents have continued to rise sharply, reflecting the ongoing shifts in the rental market landscape,” says Alex Upton, managing director, specialist mortgages at Hampshire Trust Bank.

“With tenant demand remaining robust and rental stock not quite keeping pace, it’s no surprise that rents are climbing.

“As the Royal Institution of Chartered Surveyors has noted, while more landlords are bringing properties to market, tenant demand is still outstripping supply. This imbalance is likely to push rents higher as we move forward.”

The gap between rents in the north and south of England has fallen to its lowest level in more than a decade, the latest Hamptons Lettings Index has shown.

Covering the month of August, the letting agent’s research has found that the average rent in the north of the nation is almost 10% up year-on-year - outpacing the 5% growth seen in the south. This has closed the price gap between the areas to 37% (£357), which is the smallest difference since Hamptons began its index in 2013.

It comes as landlords are abandoning the buy-to-let sector due to diminishing returns. The subsequent drop in the stock of properties to let means there is currently a high number of prospective tenants competing for each new rental home that comes to market.

The government is also set to shake up the lettings market with new regulation. It has placed its Renters’ Rights Bill before Parliament, which will resurrect the Conservative government’s plans to ban no-fault evictions. There will still be some circumstances where landlords can evict tenants.

Hamptons: rents in north have ‘surged by almost half since Covid’

In its monthly Lettings Index, Hamptons has found the rent gap between the north and south of England has closed substantially over the past year. At 37%, the difference between rents in the two areas has narrowed from 43% a year ago, and is down 18 percentage points from a peak of 55% in November 2021.

Based on a three-month rolling average of achieved rents, the research found that the average new tenancy in the south came in at £1,318 per calendar month (pcm). This compared with £960pcm in the north - an area that comprises of the North East, North West and Yorkshire & Humber regions.

While the south saw rental growth peak at 8.7% year-on-year in August 2023, this rate has slowed significantly to 5% during the same month in 2024. The north has mostly maintained the pace of increases, growing 9.6% this August compared to 9.7% a year ago.

In nominal terms, the typical cost of letting out a home in the north has surged by an average of 48% since 2019. In the south, rents are up 34%, with this figure also forming the GB average. It means tenants across England, Scotland and Wales have seen a £349 average rise in monthly rents - adding £4,184 a year for the typical tenant.

When adjusted for inflation, this GB-average falls to 10% in real-terms. Northern rents are up 24% through this metric, with the North West leading the way on 29% real-terms growth.

Greater London has seen some of the lowest rates of growth, with prices having gone up 27% numerically, but just 3% once inflation was taken into account. For Scotland, nominal rents went up 48% and 24% in real-terms, while in Wales - despite a nominal increase of 19% - actual rents were 5% down on 2019’s figures.

Commenting on the findings, head of research at Hamptons, Aneisha Beveridge, said: “Much like house prices, the rental north-south divide has been closing for the last five years.  The narrowing reflects the cyclical nature of the housing market with house prices in the north of England rising 31%, nearly double the southern rate. These figures have been mirrored in the rental market, with rents in the north of England quickly playing catch up.

“But it's only been in the last year that the gap has really started to narrow beyond the point we’ve previously seen. This has been driven by the slowing of rental growth across southern England caused by greater affordability pressures. While tenants in the south have seen weaker growth in percentage terms, in cash terms, they’ve faced big rises. A 10% increase in south of England rents would cost tenants an extra £1,581 a year, £428 more than for a tenant in the north.”

Beveridge added that average rents have continued to climb due to the “higher costs” landlords are facing. She said that “nearly half” of the rent they get is being put towards costs.

Landlords are set for a major overhaul in the way they manage their property portfolio under the government’s rental market reforms.

The Renters’ Rights Bill, released this week, sets out plans to abolish section 21 notices in England, known as no-fault evictions, meaning a landlord will instead need to justify why they want the property back or need to remove the tenant.

It is part of plans to clamp down on rogue landlords and to support tenants who may fear being evicted if they challenge poor practice and unfair rent increases.

But there may be legitimate reasons why a landlord has to evict a tenant, such as if they are routinely damaging the property or stop paying rent.

Under the proposed changes, landlords will need to issue a section 8 notice that sets out their reasons for the eviction. This has prompted warnings that courts could be overrun with cases if tenants challenge the demands.

The reforms will give tenants more protection but the National Residential Landlords Association (NRLA) describes the legislation as the biggest change to the sector for more than 30 years.

It comes as landlords are already exiting the sector amid buy-to-let restrictions and tax fears in the impending October Budget.

Ben Beadle, chief executive of the NRLA, says: “Ending section 21 will leave the courts needing to hear possession claims where landlords have a legitimate reason.

“The cross-party Housing Select Committee has warned that without reforms to ensure the courts process cases much more swiftly, they risk becoming overwhelmed. This will not serve the interests of tenants or landlords seeking justice.”

The rules around eviction notices

Currently, landlords must serve a legal notice to end a tenancy. If the tenant does not leave, the landlord must go to court, which can instruct bailiffs to enforce an eviction.

Under the existing system, a landlord can evict a tenant without providing any reason using a section 21 notice.

They will need to give the tenant two months’ notice to leave the property.

Landlords may also seek possession using section 8 grounds such as rent arrears or a breach of tenancy but this can be challenged in court.

How can landlords evict tenants under Labour's reforms?

The Renters’ Rights Bill makes a few changes when it comes to evictions.

The biggest is the end of section 21 ‘no-fault’ evictions, so landlords need a valid reason to remove a tenant.

The main route to evict a tenant will be through section 8 notices, where landlords need to explain their grounds for removal and the notice period will depend on the reason.

Landlords have been given more justifiable reasons for eviction and the type of section 8 notice is split into mandatory and discretionary grounds.

Mandatory grounds for eviction

The Renters’ Rights Bill sets out more than 20 different grounds for a mandatory possession.

This includes a landlord wanting to move a family member in or sell the property. These grounds can’t be done for the first 12 months of a new tenancy and four months’ notice is required for tenants.

One of the main reasons for eviction is often rent arrears. Currently, a tenant can be evicted if they are two months behind on rent but the new legislation will increase this to three months of arrears.

Additionally, the notice period for rent arrears will increase from two weeks to four.

Landlords renting full-time to students will be able to use a section 8 notice if the property is required for a new group of students in line with the academic year after a four-month notice period.

If a tenant dies, a landlord can issue a section 8 notice no later than 12 months after death or, if the court directs, after the date on which the landlord became aware of the death. Two months’ notice is required in this situation.

No notice is required if a tenant has been convicted of criminal behaviour or has breached an anti-social behaviour order.

Discretionary grounds for eviction

There are also 11 discretionary grounds.

These include tenancy breaches or if the tenant has made false statements or caused the property's condition to deteriorate, all of which require two weeks’ notice.

Landlords can also raise issues about persistent arrears, where four weeks’ notice is needed

Tenants who are convicted for rioting in the UK can also be evicted using this route after two weeks’ notice.

Landlords must, as in the current system, go to court if a tenant does not leave. In court, they will need to provide evidence that the ground is met.

For mandatory grounds, the court must award possession if the ground is proven. 

For discretionary grounds, the court can consider if eviction is reasonable, even when the ground is met.

Paul Shamplina, founder of campaign group Landlord Action, says good landlords will benefit from clearer regulations, but promises of robust eviction grounds mean little if the courts remain overwhelmed.

“We already have cases where landlords are owed two years of rent but can’t reclaim their properties, with one of our cases dragging on for 19 months without a hearing date yet,” he says.

“Landlords aren’t banks, and many rely on rent to cover mortgages or fund retirement. Nearly a fifth of properties for sale are from landlords leaving the market, forcing tenants to find homes in an already tight market.

New rental rights for tenants have now gone live, adding extra responsibilities and rules to follow for landlords.

The Renters’ Rights Act, which passed through Parliament in November 2025, is enacted from today (1 May), abolishing “Section 21” no-fault evictions and unreasonable rent rises and switching rental agreements to rolling tenancies.

Under the reforms, renters will also get new rights to end tenancies with two months’ notice.

The new rules limit advance rental payments to one month, and tenants will get the right to request permission for a pet, which landlords can’t say no to without a good reason.

Landlords must also give current tenants a government information sheet on the changes by the end of May or risk a £7,000 fine.

William Reeve, chief executive of lettings platform Goodlord, said this is the “starting gun being fired in a new era”.

He said: “This is the most significant shake-up the lettings industry has seen in nearly 40 years. Despite months of preparation, uncertainty still looms over how these changes will play out in practice.”

There are warnings that landlords may exit the rental market as a result of the extra burdens, which could push rents up and leave some tenants in an even worse position.

Research by Goodlord shows more than 4 in 5 landlords are concerned about the legislation’s impact.

Reeve added: “As the regulatory rubber hits the road, letting agents have a critical role to play on the front line – guiding landlords and tenants through unfamiliar territory and helping them avoid costly missteps.

“There will be a variety of consequences, some intended and some unintended. Many have been well-documented, but others will emerge that nobody predicted.”

Here is what you need to know about the Renters’ Rights Act.

What is the Renters' Rights Act and when will changes be introduced?

The Renters’ Rights Act introduces a range of new requirements in the hope that they will more comprehensively protect tenants in private rented homes in England. The first phase of reforms have now taken effect as of 1 May 2026.

It goes further than the previous Tory government's Renters' Reform Bill, which had said it would delay scrapping Section 21 notices.

Landlords can no longer issue a new section 21 ‘no-fault’ eviction notice and will instead have to rely on a section 8 claim, where a valid reason will need to be provided such as antisocial behaviour or serious rental arrears.

All section 21 eviction notices issued before 1 May 2026 are still valid for six months or until the tenant leaves.

As of now, all existing and new private tenancies in England will move to the new system of Assured Periodic Tenancies, rather than typical 12-month contracts. Tenants will be able to stay in their property for as long as they want or until a landlord serves a valid section 8 notice. Landlords will require a legitimate reason for eviction such as persistent rent arrears or anti-social behaviour, and will need to give four months’ notice if they want to sell the property. Tenants will be able to end their tenancy by giving two months’ notice.

Landlords won’t have to change or re-issue existing written tenancy agreements. Instead, they must provide a copy of a government-produced information sheet, explaining the changes. There is a penalty of up to £7,000 if landlords fail to supply the sheet through email or physically.

Landlords can now only raise rents once a year, and only to the “market rate”. Bidding wars are also banned, stopping landlords and letting agents charging above the listed rental price.

Landlords are no longer able to ban tenants on benefits or with children and will need to consider requests for a pet.

Advance rental payments will be capped at one month’s rent upfront.

Housing law expert Natalie Peacock, from solicitors Rogers and Norton, said the changes are long overdue, with both landlords and tenants having faced ongoing challenges under the current system.

She said: “For years, there have been issues across the private rental sector, with landlords feeling restricted and tenants facing insecurity, poor housing standards and difficulty challenging unfair treatment.

“The Renters’ Rights Act is designed to create a fairer and more balanced system for everyone involved.”

Phase two will focus on creating a Landlord Ombudsman and a new private rental sector database, which is expected in late 2026.

A third phase will introduce a decent homes standard for private rental properties between 2035 and 2037 as it is subject to consultation.

How will the Renters’ Rights Act be enforced?

Councils have been given new powers to ensure landlords are complying with the new rules.

All 317 local authorities in England will get a share of £60 million in total (comprising £41.12 million in funding announced in April 2026 and an initial £18.2 million allocated to councils in autumn 2025) to help cover the cost of the new enforcement powers.

Landlords who seriously or repeatedly break the law will face higher fines of up to £40,000 – which is being raised from £30,000. Rent repayment orders will also be raised if the rules aren’t being followed. These will increase from one year’s worth of rent to two years. Tenants will be able to challenge offences going back to two years, rather than one year.

Landlords could also be fined up to £7,000 if they don't take practical steps to fix a "Category 1 hazard" from summer 2026.

What happens to tenancies agreed before May 2026?

The reforms apply to all tenants from May 2026.

That means any new tenancies signed before May 2026 are automatically converted into rolling agreements. This is despite landlords still issuing 12 month agreements in some cases.

Landlords who have already issued tenancy agreements won’t need to change or reissue them. But they will have to give tenants a copy of the government’s new tenancy rules by 31 May 2026.

This means that from May, all tenants will be protected by new eviction and rent rules.

Transitional arrangements mean that if a private landlord had already served their tenant with a valid section 21 eviction notice before 1 May 2026, they must begin court possession proceedings on or before 31 July 2026.

What do landlords need to do now?

Landlords should familiarise themselves with the rules now to ensure they are compliant.

If you’re currently a landlord, you’ll need to share some paperwork with tenants, either via email or as a hard copy. Where there is an existing tenancy agreement in writing, you must give renters the government’s Renter’s Rights Act information sheet 2026 by 31 May. The document is available on gov.uk and explains how the new rules will affect their tenancy.

For all new tenancies starting on or after 1 May, you must provide written information about the key terms of the tenancy – such as your name, address, rent amount and the due date, the deposit amount, repair responsibilities, and what bills the tenants must pay. This information must be given when a new tenancy is created on or after 1 May, before the tenancy is agreed. Verbal tenancy agreements must be formalised by providing a written record by 31 May.

Since 1 May, any increases in the rent amount will be capped at once every 12 months. You will need to give at least two months’ notice of the proposed rise, and it will need to be made formally through a Section 13 notice.

If you’re looking to rent out properties, you will need to ensure the adverts you are listing meet the new rules. They will need to publish the asking rent in any written advert and cannot accept an offer above this price. They cannot ask for more than one month’s rent upfront, and all parties must have accepted the tenancy agreement before you can accept the rent.

Landlords who rent to students should also seek guidance on exemptions and transitional arrangements. Student landlords have until 31 May to formally write to tenants to end the tenancy using Ground 4A of the Renters’ Rights Act. Then, from 1 May 2026 to 30 July 2026, the student landlord can give two months’ notice to end the tenancy using Ground 4A. This is a temporary arrangement. After 30 July 2026, student landlords will need to give at least four months’ notice.

How could the Renters’ Rights Act affect tenants and landlords?

The introduction of the new Act follows warnings from Tory peers and landlords that the reforms were rushed and could drive landlords out of the market, pushing rents up further.

There are also reports that some landlords are trying to evict tenants before the changes come in, while Reform has pledged to abolish the Act if it comes into power.

Tenants also need to be aware that the Act doesn’t mean landlords can’t evict renters at all.

Peacock added: “It simply ensures there must be a valid reason, rather than leaving renters living under constant threat of eviction.”

Rental reform campaigners have, perhaps unsurprisingly, welcomed the new rules as they give tenants extra protections and more security.

However, research suggests the reforms could actually block access to good-quality housing for people who don’t fit the standard referencing.

Estate agency brand LRG warns that the cap on advance payments means landlords may be unwilling to take tenants who are self-employed or on lower incomes as they would currently ask for more money upfront as a form of security.

Additionally, concerns have been raised that the new legislation will force already squeezed landlords out of the market.

Chris Barry, director at property law firm Thomas Legal, said: "Landlords now have to contend with higher borrowing costs, increased taxes and, in some cases, extreme costs for building safety remediation.

“Gone are the days of landlords making a solid return on income and capital, which begs the question for many: is there a better home for their money?

“There is now a real risk we will see fewer landlords and this could lead to increased rent unless the corporates step in to supply the market, which comes with its own risks.”

Meanwhile, others have warned there are ways the new legislation could be exploited.

“Several loopholes could still test the system from landlords exaggerating rent ‘market values’ to price tenants out, to claiming they plan to sell then quietly re-letting soon after, or shifting homes into short-term lets such as Airbnb to sidestep the new rules,” Ranald Mitchell, director at Norwich-based mortgage broker Charwin Mortgages, said.

“The intentions are right as renters need stability but unless enforcement keeps pace, these reforms could tighten supply, push up rents and test the patience of both landlords and tenants alike.”

With 4.7 million households across England in the private rented sector, Ben Beadle, chief executive of the National Residential Landlords Association, said it is vital that the changes work for landlords as well as tenants.

He said success will be determined by whether landlords stay in the sector, if the minority of bad landlords are deterred and how the courts process legitimate possession claims.

Beadle added: “On all three tests, the jury is very firmly out. We will be monitoring developments closely to assess whether the Act is working as intended in practice.”

Landlords are being driven out of the buy-to-let (BTL) sector in record numbers as a result of the “mounting financial strain” of the investment, industry figures have warned.

According to Rightmove figures, almost a fifth (18%) of homes that are currently being put up for sale used to be rented out. This is up from 8% in 2010 and well above the five-year average (14%), although Rightmove said the latest figures were a sign of a growing trend rather than a sudden mass exodus.

London is seeing the biggest lettings-to-sales turnover, with 29% of the properties currently on offer having previously been available to rent, the property listing website has found. Scotland (19%), where lettings rules are different to those in the rest of the UK, and the North East (19%) were the regions with the next highest rate of conversions.

It comes amid concerns that the withdrawal of mortgage interest relief and the threat of a capital gains tax (CGT) raid in next month’s Budget could increase the number of landlords quitting the rental market. The National Residential Landlords Association (NRLA) has urged Labour to bring in “pro-growth tax plans” to ensure there is enough stock to house renters.

Although it was once seen as a secure, long-term investment, returns from BTL have been plummeting in recent years. High landlord mortgage rates, the Renters Reform Bill, and the scaling back of tax breaks have served to hit returns, despite a surge in rents. These have all been blamed for a drop in the amount of rented accommodation.

Rightmove: ‘buy-to-let sector needs support’

Despite an increase in the proportion of previously-rented homes being put on the housing market, the number of new homes coming to the market has still not recovered to pre-Covid levels. Rightmove - which is currently at the centre of a takeover attempt - has found the number of homes coming to the market is still 3% lower than it was in 2019.

At the same time, the decline in the availability of rental stock is driving up rents. This, coupled with the inflation crisis and high interest rates, is likely to have had the effect of denting prospective buyers’ ability to raise a deposit.

The property listing site has argued that landlords need to be incentivised to stay in the BTL sector, and invest in more homes to ensure supply meets demand. Tim Bannister, Rightmove’s property expert, said: “A healthy private rented sector needs landlord investment to provide tenants with a good choice of homes. We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.

“However, despite the trend of more landlords choosing to sell up, it doesn’t appear to be a mass exodus, and we will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale. For example, these homes could provide first-time buyers with more choice.

“They might also be purchased by other landlords and put back into the rental market, which would signal a changing of the guard rather than a complete exit from landlords. In any case, we hope the government is considering ways it can support landlords and the private rented sector ahead of the Autumn Statement.”

Lettings industry urges government not to hike capital gains tax

Bannister was echoed by several key figures in the lettings industry. Major property services firm Leaders Romans Group (LRG) said the government should reverse Section 24. It said the mechanism is one of the “most significant” reasons for why landlords are exiting the BTL sector.

Allison Thompson, its national lettings managing director, said: “This poorly conceived policy, aimed at boosting homeownership by reducing buy-to-let competition, has instead driven up rents and forced many landlords to cut back on costs and investment in their properties. Section 24, alongside rising interest rates, is one of the greatest burdens on landlords today.

“By disallowing the offset of mortgage interest relief, landlords have faced mounting financial strain, which has contributed to the current housing supply challenges. Reforming Section 24 is key to relieving this pressure, encouraging investment in rental properties, and ultimately stabilising the market for both landlords and tenants.”

Thompson added that failure to act would lead to a “ripple effect” of soaring rents and a continuing reduction in the amount of money being invested in housing. Both of these knock-on impacts will “further exacerbate the housing crisis”, she warned.

According to estate agents trade body Propertymark, Section 24 has already seen landlords pass their increased costs on to renters. It said many landlords were now in break-even or loss-making positions as a result.

London-based estate agency Benham & Reeves said any move by Chancellor Rachel Reeves to hike CGT in her Budget could also backfire. Its director, Marc von Grundherr, said: “The potential equalising of CGT is, of course, a concern for many landlords. If the Labour government was to follow through with it, it could make for a significant increase in the tax paid by the average landlord when the time did come for them to exit the sector.

“This would be yet another blow to those who provide vital housing stock that is sorely needed within the rental sector, following a string of legislative changes already introduced in recent years to dent profitability.

“Despite this, we’re simply not seeing the exodus of landlords that is so often reported, as despite such changes, buy-to-let remains a strong investment. It’s certainly one that most take with a very long-term view and they expect ups and downs, but generally speaking, the returns are consistently good.”

The NRLA, the UK trade body representing most landlords, called on the government to develop a “housing strategy that recognises the need for more of every type of property”, such as private rented homes.

MoneyWeek asked the government whether its upcoming Budget would see any tax hikes for landlords, and if it planned to introduce any support measures to keep them in the BTL sector. A Treasury spokesperson told us: “Following the spending audit, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22 billion hole in the public finances left by the last government. Decisions on how to do that will be taken at the Budget in the round.”

Rental growth has slowed to its lowest level for 33 months but there are still parts of the UK where landlords can make a decent profit from their buy-to-let portfolio.

The days of double-digit returns from property investing appear to be over as the cost-of-living crisis has weakened tenant demand and tax clampdowns have reduced the attractiveness of buy-to-let, leading many landlords to exit and pushing up supply.

This appears to be dragging rental growth lower as landlords seek to fill their properties.

The latest data from Zoopla shows rents for new lets have risen by 5.7% over the 12 months to June 2024, the lowest level for almost three years.

Rents have risen by just 1.2% over the first half of 2024, the property website says – another three-year low.

This puts the average UK rent at £1,232 per month, or an increase of £66 per month compared with this time last year.

Why is rental growth slowing?

Double-digit rental growth was never going to last forever.

Estate agency brand Savills warned last year that rental inflation will eventually reach an affordability limit as there is only so much renters can pay amid other bill hikes.

Additionally, falling mortgage rates have made it cheaper to buy a property, taking people out of the rental sector.

Zoopla’s data shows that demand for rental homes has fallen by 39% over the past year.

It says a “small but not insignificant number of private landlords” are selling their rented homes in the face of a changing property investing environment and higher buy-to-let mortgage rates. This is acting as a drag on the total number of properties available to rent. 

The property website adds that while estate agents have 17% more homes listed for rent than a year ago, the average letting agent still has a third fewer compared with the pre-pandemic average.

Where are the best rental returns?

Rents have fallen across several major UK cities over the first half of 2024, Zoopla says.

The largest fall has been in Nottingham where rents are down 0.6% annually, followed by a 0.4% drop in London and 0.2% declines in Brighton and Glasgow.

Of the 64 cities that Zoopla tracks in its rental index, 75% have registered lower rental growth.

But rents continue to rise at an above-average rate in more affordable markets close to large cities, so it may be worth landlords looking a bit further afield.

The index shows that average rents rose by 6.9% annually in Rochdale during the first half of 2024, followed by rises of 5% in both Doncaster and Southend.

Sunderland and Telford registered growth of 4.4% and 4.3% respectively.

Zoopla still expects rents to rise overall this year but at half the rate of the 8% rent inflation over 2023.

“Rents have risen so fast they have over-shot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent,” says Richard Donnell, executive director at Zoopla.

“Rents continue to rise more quickly in more affordable areas adjacent to large cities as renters seek better value for money.

“Rents are on track to be 3-4% higher over 2024 which is more than half the level recorded last year and below earnings growth providing some modest relief for the UK’s private renters.”

The UK property market brightened slightly last month, with growing optimism that house prices will rise and sales will perk up, according to the Royal Institution of Chartered Surveyors (RICS).

Its latest survey reveals that while new enquiries and sales remained steady in July, more estate agents and surveyors expect market activity to increase in the months ahead. Sales expectations are now at their strongest since January 2020. They also think house prices will rise over the next 12 months.

The improved sentiment is partly due to falling mortgage rates. Average mortgage rates dropped last month as the market correctly anticipated a rate cut by the Bank of England. Yesterday (7 August), Halifax reported that house prices jumped 0.8% last month, with the lender expecting more house price growth this year. Zoopla also said last week that the property market is heating up, with buyers making higher offers and more sales agreed.

However, the picture is not so rosy for the rental market. Landlord numbers fell again, while the number of tenants keeps rising – and RICS members expect rents to increase.

Optimism grows in UK property market

New buyer enquiries picked up a little in July, with more buyers looking to buy a home – a result of +2%, up from -6% last month, according to the RICS survey. Whilst still broadly flat, it is the first time in four months that there have been positive numbers of buyers looking to enter the market.

The number of agreed sales also saw an improvement. While this month's -2% (net balance) result is still inside negative territory, it continues the positive trajectory since it scored -13% and -6% in May and June, respectively. 

Looking ahead, a net balance of +30% of respondents predicts that sales will rise over the next three months, which is the most positive sentiment since January 2020. 

And while RICS house price indicators continue to drop in most UK regions (especially East Anglia and Yorkshire & the Humber), respondents expect those falls will soon turn into increases. They think prices will be higher in a year's time. Last week, Nationwide said UK house price growth hit a 19-month high in July.

So, what’s behind this improved positivity in the housing market? According to RICS, lower mortgage costs are a big factor, although it adds that the full impact of the interest rate cut and the government's announcements on housing reform will not be evident until next month's report.

“The new government’s focus on boosting housing development alongside the recent quarter-point base rate cut does appear to have shifted the mood music in the sales market, with projections for both near and medium activity picking up,” comments Simon Rubinsohn, chief economist at RICS.

“Inevitably, significant challenges lie ahead in delivering on the ambitions around planning reform and it is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, adds that estate agents “have faith that interest rate cuts will breathe new life into a market that grew stuffy and stagnant in the early summer”.

Back in May, the RICS survey revealed that the UK housing market saw a dip in confidence, partly due to a rise in mortgage rates. Meanwhile, house prices were broadly flat from April to June this year.

What’s happening with the rental market? 

In the rental market, the gap between demand and supply continued to widen, suggesting that we could see more rent increases. 

Many buy-to-let landlords are looking to exit the market, while the number of tenants keeps rising. 

Rubinsohn notes: “The difficulties in the lettings market remain as intense as ever with little prospect of any relief in sight. Demand is continuing to run ahead of supply with many respondents to the RICS survey noting that landlords are looking to reduce holdings in the face of an increasingly hostile environment for investment in the sector.”  

Coles says that the prospects for renters could get even tougher in the coming months if buy-to-let landlords take fright at rumours of a possible capital gains tax hike. 

“This could encourage more landlords to sell up before any potential change comes in, cutting the number of rental properties again," she warns.

Average advertised rents have hit a record high as landlords prepare for a summer boom in lettings demand.

The summer months are typically busy times for the buy-to-let market as students relocate to university towns and families seek a new place to live before the new school year.

This is reflected in new figures from property website Rightmove that showed advertised rents hit a record £1,314 during the second quarter of 2024.

The figure was up 6.8% annually and rose 1.8% on a quarterly basis.

London rents have also risen to a new record of £2,661, according to Rightmove, 4% higher than last year.

The number of enquiries each property is receiving from would-be tenants is now 17 which, while down from 26 in 2023, is more than double the eight at this time in 2019, Rightmove said.

“With 17 enquiries for every available rental property, the market remains out of balance and difficult for tenants, says Tim Bannister, director of property science for Rightmove.

“We need landlord investment to increase stock and help achieve a healthier supply and demand balance in the market.”

The data follows research by Foxtons last week which highlighted a busier period as the market enters peak lettings season.

Where are rents growing the fastest? 

There were warnings earlier this year that rental growth may slow as tenants hit an affordability ceiling due to high inflation.

But high mortgage rates have also restricted many people's ability to buy a property, keeping demand for renting high.

The lack of rental supply is also benefiting landlords, helping to keep rent and yields relatively high.

Advertised rents were up by the most in the North East of England during the second quarter, rising 10.3% annually, followed by a 9.3% rise in the West Midlands.

The highest quarterly increase was in the North East as well, up 2.8%.

Landlords are enjoying the highest yields in Scotland, at 8.5%, followed by an 8.3% rise in the North East of England.

Despite most rental price hotspots sitting in the North of the country, the highest annual change in rent was in Walton-on-Thames, Surrey during the second quarter, up 30.4% to £1,960 per month.

The second largest rise was in Blackburn, Lancashire, where rents rose 18.1% annually to £711.

Is buy-to-let still profitable?

Landlords have faced a tough few years, with restrictions on tax relief and extra stamp duty charges for buy-to-let purchases.

This has hit landlord profits and reduced the attraction of property investing.

Landlords may also be worried about plans by the government to scrap section 21 eviction notices, making it harder to remove tenants.

Tom Bill, head of UK residential research at Knight Frank, warns that this could push rents higher.

“The extent to which rents have risen in recent years underlines the dangers of disincentivising landlords,” he says.

“A growing burden of red tape and taxes means many have sold up and falling supply has increased upwards pressure on rents. Any new legislation designed to protect the rights of tenants must therefore be careful that it doesn’t come with a high price tag.”

Data from estate agency brand Hamptons suggests that rather than leaving the sector, landlords aren’t adding to their portfolios.

Its research suggests landlords purchased 10% of all homes sold across Great Britain during the first half of this year, the lowest share since 2010.

“Rather than a mass landlord sell-off, the lack of homes available to rent has been caused by fewer investors entering the market,” says Aneisha Beveridge, head of research at Hamptons.

“Tax and regulatory changes introduced since 2016 have been the main culprit, but these disincentives to invest have been compounded more recently by higher interest rates and political uncertainty around the threat of more rental reform."

Rightmove data shows that despite overall rental supply slowly improving from last year, rising 14%, the number of rental properties available is still 20% below pre-pandemic levels.

The property website suggests around 120,000 more rental properties are needed to bring rental price growth back towards more normal pre-pandemic levels but support is needed for landlords.

“There is an opportunity to encourage landlords to continue to invest in good quality homes, for example through tax changes, incentives to help with energy-efficient upgrades or a general sentiment change in government towards working alongside and with landlords,” adds Bannister.

“Landlords have previously told us that the government’s perception of landlords is one of their main concerns about the sector. Support for both tenants and landlords will be key to achieving long-term stability in the rental market.”

The buy-to-let mortgage market has shrunk for the first time ever as soaring borrowing costs and higher taxes force landlords to sell up.

Potential property investors are also being put off from becoming buy-to-let landlords.

The volume of lending for buy-to-let house purchases more than halved over the course of 2023, according to the trade body UK Finance.

The number of new mortgage loans being granted fell from 25,280 in the fourth quarter of 2022 to 12,422 in the first quarter of this year.

Rapidly rising interest rates played a major role in this trend, making it harder for those looking to buy a rental property to pass lenders’ affordability tests.

In terms of outstanding mortgages, the buy-to-let market contracted for the first time, from 2.039 million mortgages in Q1 2023 to 1.98 million in Q1 2024.

Meanwhile, buy-to-let mortgage arrears have rocketed 93% over the past year, with 13,570 home loans in arrears.

The buy-to-let environment is likely to become even more challenging for landlords, with the government confirming in the King’s Speech last week that it would introduce legislation to "give greater rights and protections" to those renting, including "ending no-fault evictions".

Buy-to-let market shows strain 

While talk of squeezed landlords is nothing new, this is the first time UK Finance has recorded an annual decline in the size of the buy-to-let mortgage market. 

Lower mortgage lending indicates landlords exiting the market, and potential investors choosing not to buy rental properties.

A number of factors have been reducing the appeal of being a landlord over the past few years, and denting their profits.

For example, landlords now face extra stamp duty on second and subsequent properties, and you can only get mortgage interest relief at the basic rate of tax. Previously, higher-rate taxpayers received 40% tax relief on mortgage payments.

Higher mortgage rates and reduced capital gains tax are also hitting landlords.

In terms of profitability, despite rents increasing, the rising costs of being a landlord means that it’s not as profitable as it once was. 

In the first three months of 2018, the average interest cover ratio – the amount of a landlord’s mortgage costs covered by their rental income – was 342%. In Q1 2024, it had dropped to 191%.

UK Finance says being a buy-to-let landlord has become “more challenging and less attractive”.

Buy-to-let mortgage choice

The UK Finance report reveals that most buy-to-let borrowers continue to choose fixed-rate mortgages, with 90% of new lending during the past two years being done on a fixed-rate basis. 

However, when compared with the residential sector, a larger proportion of landlord mortgages are on variable rates.

This has contributed to proportionally more buy-to-let mortgage holders falling into arrears.

At the end of 2023, there were 13,570 buy-to-let mortgages in arrears. While this is a 93% increase on the same quarter a year ago, it’s still just 0.68% per cent of all buy-to-let mortgages.

The number also remained flat in Q1 2024.

Most buy-to-let mortgages are interest-only. As such, they’re more affected by higher interest rates.

There were 600 buy-to-let possessions during the first quarter of this year, compared with 430 in the same quarter a year ago. According to UK Finance, this is still below the number before the pandemic.

Landlords are facing much higher mortgage costs compared to a few years ago. The average two-year buy-to-let mortgage rate today is 5.43%, according to the data analyst Moneyfacts, while the average five-year fix is 5.5%. 

If you’re a landlord struggling to meet your mortgage payments, speak to your lender. They have a range of options available to support customers - and contacting them will not impact your credit score.

What next for buy-to-let? 

Landlords may see a seasonal bounce this summer with rents set to rise as the “peak lettings season” begins.

Looking more long term, all eyes will be on the next set of regulations to impact property investors.

James Tatch, head of analytics at UK Finance, comments: “A flexible and well-run private rental sector is an essential part of the housing market. Landlords face a number of challenges, from changing regulations to rising interest rates, but have shown resilience.

“However, given the new government is committed to abolishing Section 21 'no fault' eviction notices, it must make sure that responsible landlords have other options for when they have legitimate reasons to take their property back.”

He believes that with strong rental demand and strong lending standards, the buy-to-let sector could emerge from last year’s downturn sooner than previously expected, and that further rises in arrears are limited.

Having said that, UK Finance is forecasting a further drop in buy-to-let mortgage lending this year. It thinks lending will fall by a further 13%, to £7 billion.

Landlords could be set for a much-needed boost to their buy-to-let portfolios as the rental market hits its traditional peak summer period.

The summer is often a busy time for the buy-to-let market as landlords aim to cater for families finding a new home to get settled into before the new school year starts, plus it can be a less disruptive period for tenants to move.

Additionally, there is usually an influx of students to London as they try to secure accommodation for the next academic year.

More people could also be choosing to rent rather than buy a property due to high mortgage rates.

Analysis by major London estate agent Foxtons suggests activity in the summer lettings market has already started to pick up, with applicant demand rising 15% between May and June.

This extra demand could benefit landlords and property investors who have seen their rental profits hit by restrictions on tax relief in recent years, while there are warnings that rental growth has hit an affordability ceiling.

Peak lettings season

We may not have had much of a summer in the UK yet, but there are signs of the rental market hotting up, which could be good for landlords.

Applicant levels in central London experienced the highest demand, up 3% annually in the second quarter and 9% so far this year in east London, according to Foxtons.

Applicant budgets continued to rise, Foxtons says, reaching an average of £547 per month, the highest in recent years and 2% higher year-on-year. This means tenants could be willing to pay more to rent a decent property.

Budgets for one-bedroom flats increased by 5% annually, the agent said.

While there was a slight 4% reduction in listings from May to June, the number of new market listings is up 8% so far this year.

A lack of stock may also benefit landlords as they could charge higher rents to manage high levels of demand.

However, rents have actually decreased by 2% annually in the capital, suggesting there is a limit to what renters will pay amid the cost-of-living crisis.

“The peak lettings season has begun in earnest,” says Gareth Atkins, managing director of lettings.

“Our data shows renter demand rose 15% in June, in line with last year’s numbers so far, and it should continue to push upwards through the coming months."

Can you still profit from buy-to-let?

Many of the perks of buy-to-let have reduced in recent years.

Landlords now face extra stamp duty charges and you can only get mortgage interest relief at the basic rate of tax.

That has become a problem with rising mortgage rates, while reduced capital gains tax allowances mean even selling up can hit your profits.

Rental growth has slowed in recent months as landlords have been forced to cut rents to ensure they remain affordable for struggling renters.

Some landlords may even be heading for the exit due to the new Labour government’s plans to ban section 21 'no-fault' eviction notices.

But the rental sector still suffers from a lack of supply and high levels of demand, which could keep rents high in some areas.

Data from tenant referencing provider HomeLet shows rental growth was at 5.7% annually in June, almost half the rate of a year ago. But some regions such as the north of England are still seeing growth of up to 10% and much of the lowest growth is in the south of the country.

The latest Office for National Statistics (ONS) data also suggests rental growth remains high. 

Average UK private rents increased by 8.6% in the 12 months to June 2024, according to the ONS, hitting £1,310 in England, £743 in Wales and £959 in Scotland.

Property investors have been hit with a 45% drop in annual returns since the pandemic as high mortgage rates and tax relief restrictions weigh on returns, new research suggests.

It comes as the perks of buy-to-let investing have reduced in recent years amid extra stamp duty charges on additional property purchases and restrictions on mortgage interest relief.

More recently, higher buy-to-let mortgage rates and slowing rental growth during the cost-of-living crisis have dampened the profits that landlords can make from property investing.

Analysis by comparison website Finder has found that yearly returns for a landlord taking out a buy-to-let mortgage on the average UK property were more than £4,000 lower in April 2024 – a 45% drop – compared with the same month in 2020.

The research highlights that incentives are still lacking for landlords to invest in rental properties, as high mortgage rates – 4.73% for the average two-year buy-to-let mortgage in June 2024 – hit their portfolios.

Meanwhile, property brand Savills has previously warned that high inflation over the past couple of years means tenants are, understandably, reaching an affordability ceiling on what they can pay for rent.

Its latest data shows rental growth in prime areas has hit a three-year low.

The state of the UK rental market

Finder compared average buy-to-let mortgage rates, house prices and rents in the UK to estimate the returns for a landlord signing up for a new mortgage deal at each point in time. 

It found that if a landlord had taken out a two-year fixed-rate buy-to-let mortgage with a 25% deposit for the average property worth £230,318 in April 2020, they would have had an average monthly return of £776 from rental income after paying the interest. This would total £9,309 over a year.

However, if they’d taken out the same mortgage in April 2024 on the average property worth £281,373, they would get 45% less in average monthly returns at just £424. This totals £5,087 over a year, a drop of £4,221 in rental income per property.

The latest figures from Savills, covering the prime property market around London, show average rents were up 2% annually during the second quarter.

That is the lowest level since 2021, a long way from the days of double-digit returns, and is attributed by the agent to affordability barriers and more stock coming to the market.

Is buy-to-let still worth it?

Higher mortgage rates and fewer tax perks have taken some of the shine from buy-to-let investing.

Many analysts expected growth to slow this year and landlords may exit due to concerns about the new Labour government’s plans to ban section 21 'no-fault' eviction notices.

But the rental sector is still plagued by a lack of supply and high levels of demand, which could keep rents high in some areas.

Estate agency trade body Propertymark has said there were nine new applicants for each available rental property in May 2024, while property website Rightmove reported that the average rent outside of London hit a record high of £1,316 in the same month.  

“The buy-to-let market has been stagnating over the past couple of years as rising interest rates have made it less profitable for landlords,” says Liz Edwards, money expert at Finder.

“We are now seeing the worrying effects this is having on an already competitive rental market, leaving renters with fewer options and pushing prices higher and higher.”

Jessica Tomlinson, research analyst for Savills, says landlords still need to be realistic on how much they can charge tenants though.

“Realistic expectations on price and willingness to carry out general improvements to present properties at their best will be vital among landlords to retain demand,” she says.

“With some of the heat coming out of the market, some tenants who stretched themselves last year when competition was fierce are considering swapping for lower-priced properties."

The Labour Party unveiled its general election policy pledges on Thursday (13 June).

Its lengthy manifesto document, which the party titled ‘Change’, makes several major pledges, including plans to cut NHS waiting times, recruit more teachers and set up a publicly-owned green energy company. There were also several money policies.

Personal finance commitments include keeping the triple lock on state pensions, ending a VAT tax break for private school fees, and closing inheritance tax loopholes. But the manifesto was as much about what Labour didn’t say, as what it did.

According to the Institute for Fiscal Studies (IFS) think tank, the party has joined the Conservative Party and Liberal Democrats in a “conspiracy of silence” about public spending cuts. Meanwhile, the document’s own silence on capital gains tax and the lifetime allowance has suggested neither measure will be off limits at Labour’s first Budget event - should it form the next government. However, there appeared to be little basis for the Tories’ £2,000 tax hikes claim in the manifesto.

Alongside its money pledges, Labour also revealed several housing market reforms. Some, like Freedom to Buy, had been announced in advance of the manifesto launch. But there were one or two property-related surprises in the document too. So, what are they - and what do they mean for housing?

Labour manifesto rental reforms

One of the more eye-catching pledges Labour made was a plan to extend Awaab’s Law. The law is named after the toddler Awaab Ishak, who died of a respiratory condition that was caused by excessive mould in the social housing he lived in. At present, it forces social landlords to investigate safety hazards in their accommodation within a certain time frame. Labour’s manifesto suggests it could be extended to include private landlords.

However, the most attention-grabbing commitment from Starmer’s party was a pledge to resurrect key elements of the Renters Reform Bill. The legislation, which formed a key part of Boris Johnson’s 2019 manifesto, was first watered down - and then axed when Parliament dissolved for the general election.

Labour would “immediately” abolish section 21 ‘no fault’ evictions, if it gets elected on 4 July. The party says it will also give tenants the power to challenge unreasonable rent hikes, force landlords to implement minimum energy efficiency standards by 2030, and give renters greater protections against exploitation and discrimination.

These measures are unlikely to have come as a surprise to landlords given the Renters Reform Bill broadly had cross-party support. “All of the main parties are committed to ending section 21,” said Ben Beadle, chief executive of the National Residential Landlords Association. “What matters is ensuring the replacement system works, and is fair, to both renters and responsible landlords.

“Given this, we agree with [Labour’s argument] that landlords need robust grounds for possessions in legitimate circumstances, and they need the system to operate quickly when they do. We stand ready to work constructively with a potential Labour government to achieve this and ensure a smooth transition to the new system. This needs to include giving the sector time to properly prepare for it.”

Nathan Emerson, chief executive at estate agent trade body Propertymark, agreed. He added: “Any aspiration to reintroduce the Renters Reform Bill must come with full disclosure and a realistic timeline regarding the required court reform before the removal of Section 21 evictions should ever become a reality.”

Leasehold reforms

Rishi Sunak’s government had aimed to bring in large scale reform of the leasehold system. But the election announcement meant the Leasehold and Freehold Reform Act was watered down so it could be pushed through by MPs ahead of Parliament being dissolved.

Labour wants to go further than this legislation - and the Conservative manifesto - and “bring the feudal leasehold system to an end”. It says it will enact the Law Commission’s recommendations for enfranchisement, right to manage and commonhold. In terms of its more immediate priorities, it says it will set out to ban new leasehold flats and ensure commonhold is the default for apartment blocks. The party also wants to crack down on “unregulated and unaffordable” ground rents and maintenance charges, as well as end ‘fleecehold’ private housing estates

The National Leasehold Campaign has called on Labour - and the other major parties - to set out “clear time frames” for when they will enact their pledges, if they get elected.

First-time buyer support

One of Labour’s key pitches to younger voters in advance of the manifesto announcement was its Freedom to Buy scheme. This would extend the existing mortgage guarantee scheme, which is designed to help people who can’t save enough for a deposit but can afford mortgage repayments.

This scheme also ties in with a policy to give first-time buyers (FTBs) first dibs on new build developments. It claims new estates are currently being “sold off to international investors” before a shovel enters the ground.

Experts have pointed out that while the scheme may address one of the obstacles facing FTBs, high mortgage rates and high house prices relative to incomes are bigger hurdles that need attention.

For example, Rightmove said Freedom to Buy would make the mortgage guarantee scheme more “attractive to lenders” and added that its continuation would be “helpful”. But the property listing site also said it should be the “first step amongst many” for FTB support.

Its property expert, Tim Bannister, said: ‘We welcome policies and innovations which are trying to help more first-time buyers onto the ladder. Creating a permanent mortgage guarantee scheme would at least give first-time buyers the certainty that the option will be there.

“However, we know from our own research that policies like the mortgage guarantee scheme have limitations, and are only able to help a very small pool of future first time buyers that fit specific requirements. One of the biggest barriers for first time buyers is being able to borrow enough from a lender, which a mortgage guarantee scheme doesn’t address.”

House building and planning reform

The main Labour pledge in this area is a plan to build 1.5 million homes over the next Parliament. It says it will get there by bringing in mandatory housing targets, as well as reforming the planning system. New builds will also have to meet higher standards and sustainability targets - although it appears to have committed to watering down nutrient neutrality protections.

It has identified that a lack of planning officers at local authorities is holding up development. So, it plans to increase the stamp duty surcharge on purchases by non-UK residents by 1%. While the amount raised - £40m - is peanuts in fiscal terms, the party claims it would be more than enough to appoint 300 new planning officers (a pledge that would cost £20m).

While Starmer’s party says it will “ensure local communities continue to shape house building in their area”, it has not ruled out intervening if it believes developments are being blocked. Likewise, while it says it will prioritise unlocking the ‘grey belt’ - i.e. old car parks and concrete wasteland - and will take a “brownfield first approach”, it says it will also take a “more strategic approach” to greenbelt development.

Alongside these pledges, it has committed to building another generation of new towns, and finding new ways in which different tiers of local authority can work together on housing across their boundaries.

The Institute for Government think tank described the house building programme as “ambitious” but added that its success would hinge on whether new MPs could be kept on board. It said: “Successive governments – of all stripes – have made ambitious promises but failed to deliver them in a country that wants more houses built nationally but doesn’t want to build them locally. This manifesto signals that Labour are serious about setting a better record.

“It makes no bones about prioritising new houses above local objections. The question is whether Labour’s plans will survive contact with Parliament, whatever size its majority. In recent years, backbench MPs made short work of first defeating Boris Johnson’s proposals to reform the planning system, then pressuring housing secretary Michael Gove into downgrading local housing targets to ‘advisory’ status (and many local areas have since taken this opportunity to scrap proposed developments).”

Also reacting to the planning reforms the party has proposed, head of policy and market insight at the National Federation of Builders, Rico Wojtulewicz, said: “Labour appears to understand how damaging a broken planning system is for society, the economy and growth. For the construction industry this means businesses will finally be able to plan, rather than operate hand to mouth. Such a change will ensure cashflow certainty for businesses’ reinvestment, which in practice means a reduction in construction insolvency, more directly employed labour and apprenticeships, and businesses getting back to constructing, rather than spending ninety percent of their time getting permission to start building.

“However, we have been here before with [ex-Housing Secretary] Robert Jenrick’s ‘Planning for the Future’ white paper, which was shelved after the Conservative government lost a by-election and backbenchers revolted over land use.”

Wojtulewicz added that there were some concerns about the “lack of detail” on some key policy proposals. For example, around biodiversity and nutrient neutrality.

Whether to choose property versus a pension as a retirement plan has been a British conundrum for decades.

When the first buy-to-let mortgages were introduced in the late 1990s, would-be property magnates bought houses relatively cheaply, renovated and flipped for a profit against a backdrop of low interest rates, cheaper mortgages and more relaxed borrowing criteria.

Add to this the domino-like collapse of many a final salary pension scheme in the surrounding years and setting yourself up with a few rental homes to fund your retirement seemed like a good plan for many. But is it still?

Richard Meek, managing director at Birmingham-based chartered financial planners Colmore Partners, doesn’t think so.

What are the risks of using property to fund retirement?

Beyond the diversification concerns of relying on any single asset as a long-term solution, Meek raises two main challenges.

“One reason people have made a lot of money in property over the last 20-odd years is because of gearing,” he says.

Most homeowners, unless they buy outright, put down a fractional amount of the property’s value. Yet any growth over time applies to the entire amount, so the ‘return’ can look very impressive. Of course, this applies to any losses as well, hence concerns about falling into negative equity whenever house prices have fallen sharply.

“Rightly or wrongly, in the UK, a house is the only asset this usually applies to, unless you’re super wealthy, so many people often assume that property is the best form of investment. I also find it very difficult to believe that house prices will continue to rise in the same way as they have in the past,” says Meek.

Those levered returns – or perceived returns – are multiplied with property portfolios. According to industry body Propertymark, the private rented sector (PRS) is still dominated by smaller landlords, with 45% owning one rental property and 38% owning two to four, while the 17% with five or more account for 49% of tenancies.

This magnifies upside potential but also downside risk, as Schroders’ head of strategic research, Duncan Lamont points out.

The effect of gearing has been used by many buy-to-let investors but as we’ve pointed out – it can also have the reverse effect.

“The sharp house price falls in 2008 left many highly leveraged landlords with negative equity,” said Lamont.

Schroders has run the numbers and said when compared to saving into a pension, the returns property typically generates just don’t stack up.

How returns from property compare to pension investments

Over the past 20 years, the asset manager said the value of the average UK property has only managed to roughly rise in line with inflation, while global equities – including dividends – are 7.3% ahead of inflation over the same period. Lamont says even without dividends being included, global equities have still outperformed inflation by nearly 5% a year.

“Based on these numbers, in cumulative terms, a property worth £100,000 in 2005 is now worth £103,000 in inflation-adjusted terms. Whereas £100,000 in global equities is worth £410,000,” he explains.

Lamont adds that in nominal terms – taking into account fees, taxes and inflation – that same £100,000 house would be worth £182,000 but a stock portfolio would be worth £728,000, or £450,000 if dividends are excluded from calculations.

These figures are based on house price alone, rather than rental income. Schroders’ number-crunching finds gross rental yields have averaged around 6% for the past 20 years, with wide variation by region and time period.

“[That 6%] is before costs and expenses, with net rental yields typically 1-2% lower,” says Lamont.

“Adding 4-5% a year to the property figures above would still leave global equities with a big advantage in total return terms.”

While looking over a longer timeframe – 50 years or so – presents a more favourable picture for returns from property, global equities still come out on top.

Several clients of Meek’s with second or multiple homes are keen to try and sell, fed up with the ‘hassle factor’.

“Given the choice, most would sell – not my advice but their decision. Most of that is to do with the hassle – maintenance, difficulty getting hold of tradesmen, an uncertain tax regime. For many, it feels like more trouble than it’s worth.”

Property management comes with other costs, such as upfront charges like stamp duty and legal fees and ongoing costs including insurance and letting management fees.

Compare this scenario to saving via a pension, where contributions are invested pre-tax and the government offers ‘free money’ in the form of tax relief and – if you’re in a workplace scheme – employer contributions.

Lamont added that with no upfront costs when investing in a pension, savers are better off from day one.

“Ongoing costs in a DC pension are capped at 0.75% a year but typical fees are lower,” he said. “Willis Towers Watson’s DC Pensions and Savings survey found that the average charge in 2025 was around 0.3%. Reducing the long-term real returns from equities by 0.3% a year or even 0.75% would not alter the earlier arithmetic which showed how much better stocks had performed than property.”

How do house prices differ around the UK?

It’s a very British tendency, borrowing hundreds of thousands of pounds to live in a house, and we’re often not even getting particularly good value, relatively speaking.

The Resolution Foundation finds the UK’s housing stock offers the worst value for money of any advanced economy, citing high costs and low quality. A 2024 report from the think tank shows UK households pay 57% more for the same (quality-adjusted) housing as their counterparts in Austria, and 36% more than those in Canada.

Echoing Meek’s concerns over concentration risk, Lamont believes housing is as undiversified as you can get.

“Pick the wrong property type in the wrong area and that one decision could have a material impact on your overall retirement savings, if you’re one of those who have preferred property to investing via a pension.

“Across major regions and property types, an average £100,000 property 20 years ago is now worth anywhere between £64,000 and £137,000, in inflation-adjusted terms.”

Flats have failed to keep pace with inflation in every major UK region over the past 20 years apart from in London.

Property price growth over the past 20 years by region and property type, plus global equities, inflation-adjusted % p.a.

Source: Schroders

Investment manager Rathbones has also issued warnings against relying too much on property as a retirement plan.

Its latest Don’t Bet the House report looks at recent performance of the UK housing market and fresh factors shaping house prices, including slower real income growth, higher mortgage costs and a more demanding tax and regulatory environment around buy-to-let investments.

London has suffered a particular collapse; house prices fell in 17 of the 32 boroughs in 2025 – a total 1.7% fall across the capital. This masks dramatic falls in places such as Westminster or Kensington and Chelsea, where prices plunged 14% and 7% respectively.

Further, it examined house prices in the 25 local authorities (LAs) in England with the highest density of second homes, finding areas with high concentrations of second homes have also seen prices fall disproportionately. The report reveals that 19, or 76%, of the 25 LAs witnessed declines in 2025, compared to 26% nationally. This rose to 20, or 80%, by the first quarter of 2026.

Charlie Newsome, senior investment director at Rathbones, says: “We’re seeing many people selling their buy-to-let and other rental properties because they no longer make sense as short to medium-term investments, and they are putting that money into invested portfolios instead. Right now, residential property isn’t seen as a driver of wealth for later life and retirement for most people.”

More than half of landlords remain committed to the lettings market despite the progress of the Renters (Reform) Bill, a new survey has suggested.

Figures compiled by major property services firm Leaders Romans Group (LRG) suggested 55% of investors in the buy-to-let market had no intention of changing their approach in light of the proposed set of new regulations. A further 62% stated they planned to either maintain or even increase their property portfolio over the next 12 months.

While landlords appear to be feeling positive about the future, the sector has gone through a bruising period. Rents have soared to record levels amid a lack of housing stock and plummeting returns for buy-to-let investors, who have been hit by a greater tax burden and the large increase in mortgage rates.

It comes as the Renters (Reform) Bill is set to return to parliament when the Easter recess ends next week. The prospective new rulebook for landlords, which seeks to ban Section 21 ‘no-fault’ evictions and give tenants greater protections, looks likely to be watered down after a revolt by backbench Conservative MPs. 

The Sun has reported existing tenants will have to wait until the completion of a government review into the ‘readiness of the courts’ to handle eviction disputes.

LRG: Landlords committed to lettings sector for ‘long-term’

LRG, which owns brands including Acorn, Langford Russell and Scott Fraser, polled 630 landlords from across the UK in March 2024. It found that most of them viewed their investment in the rental market as being long-term.

Fewer than a fifth of those surveyed said they would be looking to reduce their property portfolio over the next 12 months, with a similar number saying they would be seeking to leave the market altogether. However, it means more than 80% of landlords are planning to continue letting out homes.

The poll also asked landlords about which elements of the Renters (Reform) Bill they felt most negative about. Surprisingly, a higher number (56%) said greater rights for tenants to keep pets were more troubling than the likely abolition of Section 21 (54%).

Meanwhile, most landlords were also positive about some of the measures the Bill is seeking to implement. For example, 52% welcomed the introduction of an ombudsman for the sector.

Commenting on the findings, Allison Thompson, the national lettings managing director at LRG, said: “Although there are some substantial changes in the private rented sector, both political and financial, the so-called ‘landlord exodus’ is being overstated – as this research demonstrates.

“Yes, there are some significant issues with the Renters (Reform) Bill but LRG and others have been actively involved in shaping this legislation so that it is fairer on landlords who, after all, are the mainstay of the property industry and depended upon by government to provide homes to some of those most in need.

“As local authority housing waiting lists continue to increase, I hope that the government will reflect on landlords’ vital role and take their views into account as the legislation passes through parliament.”

The Renters (Reform) Bill is currently at the report stage of the legislative process. Once that stage has been completed, it will be given a third reading by MPs before being put in front of the House of Lords.

Buy-to-let may not be the attractive investment it once was but there are other ways to invest in property, particularly amid the perennial housing shortage.

The UK government has regularly failed to hit its target of building 300,000 homes a year and while this once benefited buy-to-let landlords who could charge high rents due to the lack of stock, tax clampdowns and extra regulations have reduced the lure of property investing.

Landlords have been hit with high buy-to-let mortgage rates and restrictions on mortgage interest relief, while rental growth has slowed amid the cost of living crisis.

But while landlords may be exiting the sector or at least not adding to their portfolios, the housing shortage continues.

This presents an investment opportunity beyond just buy-to-let.

Investors could take a different approach by investing in the housing shortage through the stock market.

“It is well known that the UK has an enduring housing shortage and it has done for decades,” says John Moore, senior investment manager at RBC Brewin Dolphin.

“For the most part, the problem is a simple case of supply-demand imbalance, but it has become a political hot potato in the build up to the next election as it becomes a key focus for both parties.”

Rather than investing through buy-to-let, Moore suggests backing the companies actively working to address the housing shortage – such as build-to-rent providers, housebuilders, and the ancillary services they need – providing a property-like yield without the hassle of being a landlord. 

Here are some ways to invest in solving the housing shortage beyond buy-to-let. 

The private rental sector

Rental growth may be slowing but demand for rental property remains high.

Moore highlights the PRS REIT, which invests in high-quality new-build family homes for the private rental market. 

“It has agreed a series of joint ventures with local authorities and has scale and credibility in the niche it has developed for itself,” he says.

“Even though it is one of the scale players in the sector, it only manages 5,000 units, which is a drop in the ocean of a 300,000 per year new homes target – so there is huge room for growth.”

The investment trust currently trades at a discount to net asset value (NAV) of 37.3% and offers a yield of more than 5%.

Another option is Grainger, which designs, builds, develops, owns and operates rental properties. 

It’s share price has been volatile in recent years amid high levels of debt but the stock is up 5.2% over the past year and has grown 5.78% on a five-year basis.

Its dividend yield is around 2.5%.

“The share price has been a bit all over the place through its history, but it is a strong, asset-backed, independent business,” adds Moore.

“With a portfolio of around 10,000 PRS homes, it has the most scale of any listed provider with a good runway for expansion.”

Back the builders

Housebuilders have seen profits and share prices fall over the past year after being hit by the end of the Help to Buy scheme as well as higher material costs, falling property values and reduced demand.

Lower inflation and frozen interest rates, as well as proposed planning reforms by the government to encourage development on brownfield sites, could help the market and get builders building again.

Moore suggests Vistry, which he says is “at the centre of the rented housebuilding side of the issue.”

Vistry’s share price is up 24.3% on a one-year basis but is down 4.99% over five years, while it has a dividend yield of 5.46%.

“Vistry is increasingly becoming an asset-light, joint venture-focussed operator, as it seeks to manage risk in what can be a tricky business,” he says.

“There has been a lot of movement in Vistry’s share price since interest rates picked up – even by the sector’s standards. But it should be in line to benefit as greater efforts are made to reform the planning system and provide more affordable housing, while offering a yield of almost 6% in the meantime.”

There are risks though if house prices fall drastically and demand shrinks, plus the Competition and Markets Authority (CMA) this week launched an investigation into some of the UK’s largest housebuilders concerning information sharing between firms which it suggested could be keeping prices high.

This includes brands such as Vistry as well as Persimmon, Taylor Wimpey and Berkeley Group.

Despite this, John Choong, senior equity research analyst at InvestingReviews, suggests Persimmon is well-positioned to generate "meaningful returns" over the medium term. 

Even though the developer was demoted from Britain’s main index last year, it has since made a swift return to the FTSE 100 thanks to declining mortgage rates since the summer. 

This has driven demand for housing back up, and consequently, Persimmon's share price.

Its share price is down 5% annually but up 31% over the past six months.

“Unlike most of its competitors, the York-based builder is beginning to vertically integrate is supply chain through acquisitions of Space4 and TopHat, to name a couple,” he says.

“These moves serve to reduce costs and lead times, thereby allowing for higher margins and volumes over time. Thus, although profits having declined by approximately two thirds in 2023, a recovery over the next couple of years to 2021 levels is likely to spark a resurgence in its share price, as investors price in higher profits.”

Choong also suggests Taylor Wimpey is worth considering, arguing that it is more insulated from a CMA fine and economic shocks as it caters for a more affluent customer base.

It also has a decent dividend yield of 7%, Choong says, “which makes it one of our top passive income picks.”

Additionally, Charlie Huggins, manager of the quality shares Portfolio at Wealth Club, says Berkeley Group is a good option as it is “significantly more exposed to London than the other listed builders, where the housing shortage is most acute.”

It has a unique business model, he says, as it is the only listed housebuilder able to deliver large, complex urban regeneration projects at scale. 

“The complexity of these projects reduces competition and means Berkeley can deliver higher profit margins and returns than its peers,” he says.

Berkeley Group’s share price is up 11% annually and by 9.14% over five years, while its dividend yield is 2.77%.

Support the supply chain

Rather than individual builders, you could also back the suppliers.

Cement and ready-mix concrete supplier CRH has seen its share price rise almost 60% annually and by 155% over five years.

“Brands like Tarmac and Blue Circle are key parts of the construction supply chain and CRH will also benefit from similar international drivers too,” adds Moore.

“The dividend yield on CRH is lower than average at around 2% but the company offers growth potential as a consolidator of smaller, fragmented operators in addition to the benefits of its capital investment programme.”

Another option is builders’ merchants and material supply company Travis Perkins.

Its share price has plummeted by 45% over the past five years but Moore says it should be among the beneficiaries of any pick up in housebuilding activity, “with investors receiving a dividend yield of close to 5% in the interim.”

The level of rent that landlords can charge tenants is approaching an “affordability ceiling” after reaching a record high last year, new figures suggest.

Landlords have been able to boost their buy-to-let portfolio and keep rents high due to rising demand from tenants and a lack of rental supply.

This has helped many property investors cope with scaled back tax reliefs and higher buy-to-let mortgage rates.

But there are only so many increases in rent that a tenant can take, especially amid the cost of living crisis.

Rightmove data shows the average advertised rent for new properties coming onto on the rental market during the fourth quarter of 2023 hit another new record outside of London at £1,280 per calendar month.

Despite a 16th consecutive record in newly advertised rental prices, this quarter’s rise of just two pounds or 0.2% is the smallest since at this time in 2019 before the pandemic.

Rightmove data also shows that more rental listings are facing price cuts, adding to claims that landlords are facing an affordability ceiling when it comes to what tenants can and will pay.

“We’re seeing more evidence that many tenants are reaching the point where they can’t afford to pay any more in rent, which is leading to reductions in advertised rental prices and means some properties are staying on the market for longer,” says Christian Balshen, Rightmove’s lettings expert.

“The average time to find a tenant has ticked up from 19 days at this time last year, to 22 days now. To reduce the risk of void periods, landlords will need to work closely with a local letting agent this year, who will have access to the latest market insights to back up their years of expertise.”

What difficulties are landlords facing?

Higher buy-to-let taxes, falling house prices and lower mortgage rates for first-time buyers are taking away some of the shine of property investing.

Rental returns remain high but landlords are unlikely to get the double digit gains they have been used to in the past.

These factors are prompting many landlords to exit the sector or avoid adding to their portfolio.

Some are even setting up buy-to-let companies to hold their portfolio and maintain some tax perks.

Furthermore, while buy-to-let mortgage rates have fallen from their highs last summer, they are still significantly higher than the long-term average. 

Today, the average two and five-year rates are both 5.48%, down from 6.88% and 6.72% respectively last August. For comparison, they were at 2.90% and 3.16% two years ago, according to Moneyfacts. 

Data from UK Finance reveals that this is starting to bite. There were 13,570 buy-to-let mortgages in arrears of 2.5% or more in the final quarter of 2023. This figure has more than doubled compared to a year ago, and increased by 18% in the past three months alone. 

While the figure remains small when you consider the total number of private landlords in the UK (around 2.82 million, according to the latest data from HMRC), it nevertheless points to a tougher buy-to-let landscape. 

Even those that are comfortably meeting their mortgage repayments each month will have seen their profits squeezed by rising costs. This will be exacerbated further should rents plateau.

The state of the UK rental market

Rightmove figures show that advertised rents outside of London are now 9.2% higher than last year, which whilst still a significant annual increase, is the lowest rents have been compared to a year ago since 2021.

Similarly, rents in London reached a new record of £2,631 in the final three months of 2023. 

However, this is just £4 higher than the previous quarter, as the yearly increase of rents in London halves from 12% last quarter, to 6% now. This is the first time London rent rises have been in single digits versus a year ago since 2021.

The property website suggests the rental market is slowing due to an easing of demand.

The number of tenants sending enquiries to letting agents to move is 13% lower than the same period last year, Rightmove said.

At the same time, the number of new rental properties coming onto the market is 7% higher than last year.

This means the average number of enquiries agents are receiving for every available rental property is currently 11, down from 14 in 2019.

Many tenants can’t afford rents on offer so landlords are making cuts to attract renters.

A quarter of rental properties saw a reduction in advertised rent by the landlord during the fourth quarter of 2023, up from the 16% at this time last year, suggesting the initial advertised rental price in some areas is increasingly out of reach for some tenants.

Hayley Brinn, director at The Total Letting Service says the rental market is still really busy and the high number of applicants per property is being exacerbated by some landlords leaving the market. 

“Prices appear to be levelling out now as more choice becomes available, with tenants becoming more price sensitive, or just reaching the maximum of what they can afford to pay,” she says.

“The prices of larger properties in particular are slowing down, unless the landlord accepts an offer. 

"Some tenants are reluctant to move unless they have no choice, due to the risk of being charged higher rents elsewhere, while other tenants who may want to move are stuck due to their current rent being below market value, and the price gap to move to a larger house is out of their reach. Rent prices slowing this year would benefit these tenants wanting to move.”

Will rents fall in 2024?

One of the main fundamentals of buy-to-let investing remains the supply and demand imbalance.

There will always be people who cannot afford to get on the housing ladder and this often outweighs the level of rental stock on the market.

But Rightmove warns that early signs indicate that the annual pace of rental growth will slow further in 2024.

It is predicting rents will be 5% higher outside of London by the end of 2024, and up 3% in London.

That is a long way from the double digit returns that many landlords will be used to.

“The trend of rent growth gradually slowing continues, with an improvement in the supply and demand of rental properties having a big contribution to that,” says Tim Bannister, Rightmove’s director of property science.

“We can’t keep seeing double digit rent rises every year as tenant affordability simply cannot keep up, and 2024 is the year we think there will be a much smaller increase in advertised rents of 5% outside of London, and 3% in the capital."

Extra stamp duty and scaled back tax reliefs are making buy-to-let less attractive, but increasing numbers of landlords are holding on to some of the old perks by setting up limited companies for their portfolios.

Both individuals and companies have to pay the extra 3% stamp duty surcharge on additional homes, introduced in April 2016.

But while mortgage interest relief has been scaled back for individuals to the basic rate of income tax - taking away some of the attractiveness of buy-to-let - companies can still claim the full interest paid as an expense.

Analysis of Companies House data by estate agent Hamptons found that despite a sharp fall in the number of homes bought by landlords in 2023, the number of limited companies set up to hold buy-to-let properties continued to rise. 

Last year a record 50,004 limited buy-to-let companies were set up across the UK, surpassing 2022’s previous record of 48,540, according to the research.

Holding a buy-to-let portfolio in a company may provide some tax benefits but there are also extra costs and responsibilities associated with setting up and running a property business, plus the mortgage rates may be higher even if you can claim back the interest.

There may also be extra stamp duty and capital gains tax to pay if moving an existing property portfolio into a company structure.

“Despite last year's slowing sales market, there was no let-up in landlords rushing to incorporate,” says Aneisha Beveridge, head of research at Hamptons.

“Rather, the record number of companies set up to hold buy-to-let homes suggests a long-term commitment from landlords - particularly given the upfront costs associated with incorporating. 

“The growth has been driven mostly by existing landlords moving properties into a corporate structure to shelter themselves from higher interest rates.  Meanwhile the number of new landlords setting up shop has remained relatively muted.”

The areas where most landlords are setting up buy-to-let companies

The increase in buy-to-let companies coincided with the rise in mortgage rates last year as landlords looked to hold on to more of their profits from property investing.

In the first half of 2023, the number of new buy-to-let incorporations ran at around 2% below the same period in 2022, Hamptons said.

However, as more investors began to face higher mortgage rates, the number of limited companies set up to hold buy-to-let homes increased to 9% above 2022 levels.

Scotland recorded the largest pick-up, with an 8.4% year-on-year rise.

The South West and North East were the only two regions of the UK to record a small fall in the number of new limited companies set up, although in both regions the number of homes owned in a corporate structure continued to rise.  

A record 58% of limited company buy-to-lets in the North East were held in a company that was set up outside the region, the highest proportion in any region. 

This reflects how landlords from across the UK are targeting higher yielding buy-to-lets, particularly in the North of England, the agent suggests.

At the start of 2024, there were 345,426 active limited companies designed to hold buy-to-let property in the UK, up 11.6% from 309,643 at the beginning of 2023.  

Two thirds of current companies had been set up between 2017 and 2023 when the stamp duty and tax relief changes were phased in.

Overall, these companies own a total of 615,077 properties across England & Wales, an 82% increase from the end of 2016, according to the research.

Of the 615,077 limited company buy-to-let properties, 458,838 or 75%, have a mortgage charge against them.  

Beveridge suggests this trend could continue as mortgage rates remain high.

The average buy-to-let mortgage rate is now 5.79% for a two-year fix and 5.76% for five years.

“For as long as landlords continue rolling off cheap fixed-term mortgages onto rates which are twice or triple what they were paying, the number of homes being put into a corporate structure will remain high,” adds Beveridge.

“Longer term, the current tax regime could push half of all rental homes into a limited company, significantly reducing the existence of landlords who own buy-to-lets in their personal name.”

The pros and cons of a buy-to-let company

The key benefit of holding a buy-to-let portfolio within a limited company is being able to offset your mortgage interest against the rental income and only pay corporation tax on the profits. 

Stephen Perkins, managing director of Yellow Brick Mortgages, said: “You can also decide to hold money in the company and decide when and how you draw money out to be tax efficient.

“Whilst mortgage rates are higher on limited company buy-to-let products than personal ones, the gap has been getting smaller as more landlords opt for incorporated model so these become more mainstream. 

“Despite the higher rates, the stress-testing is usually lower, allowing the landlord to often borrow more on the same rental figure. “

It may be more tax efficient to hold a buy-to-let in a company, but it can cost more to transfer an existing portfolio, plus there is less choice of finance.

Richard Jennings, founder of Richard Jennings Mortgage Services, said: “Landlords may face higher mortgage costs when buying via a limited company, a reduced range of lenders available and a limited value of mortgage brokers who understand the additional complexities involved with managing a limited company portfolio for clients.

“We always recommend liaising with a good accountant or tax specialist beforehand.”