‘Landlords today are contending with perhaps the most complex operating environment in recent memory,’ Aneisha Beveridge, head of research at Hamptons, observed. Although some landlords are concerned about the future viability of the buy-to-let market, it is crucial to underscore that the sector is not expected to sharply decline. On the contrary, it is currently on the path of transformation in adapting to the financial, regulatory, and infrastructural circumstances of the market. Strategic rethinking lies at the centre, and landlords are working out different ways to engage with the buy-to-let market.
Current Conditions
The latest data indicates the buy-to-let market continues to perform well. The average rental yields across England and Wales rose by 7.5% this year, compared to the 7.2% increase at the same time last year. The largest increases appeared in regions such as the North East by 9%, North West by 8.5%, Yorkshire & Humberside by 8.2%, and Wales by 8.2%.
Contrary to the claims that the buy-to-let market is losing its appeal, the market stands firm in appealing to many prospective customers. This is supported by the latest figures showing that buy-to-let searches totalled 308,434 this year, which represents an annual increase of 4%. The buy-to-let loaning industry continues to facilitate market activity, with Q4 2024 witnessing 52,648 new buy-to-let loans, up 39.2% compared to Q4 2024.
Yet it is important to emphasise that particular property types are becoming difficult for landlords to effectively manage. An example of this issue is the maintenance of older homes. According to the HMRC’s 2024 landlord survey, 54% of landlords identified maintaining older homes as the most challenging property type. Less challenging were leasehold flats and larger family homes, though the survey identified that these were causing landlords significant issues.
At the crux of these challenges is the increasing financial and administrative pressures landlords are expected to comply with, principally the adherence to complex regulatory procedures. This includes a range of different areas, including leasehold management, energy efficiency requirements, and health and hazards maintenance, each of which causes landlords to direct more attention and potentially more expenditure.
Changing Attitudes
Despite these challenges, landlords are not rapidly leaving the market. Conversely, these challenges have animated discussions over the most effective ways to operate within the market, and this has correspondingly influenced market patterns over the past decade.
Leaders Romans Group reported that 60% of landlords intend to retain current portfolios, compared to 22% considering exiting the sector altogether. A similar trend can be found in the latest results conducted by DPS Private Renter Sector Review, where only 25% of landlords are contemplating a full withdrawal from the market. Most landlords, taking into account the financial gains of remaining in the market, aim to either rebalance or reinvest.
Illison Thompson, national lettings managing director at LRG, observed: ‘Landlords are not walking away from the sector. They are responding to a more complex environment with caution, clarity and long-term thinking. The story here is one of measured transition.’
One such trend is landlords setting up limited companies. According to Hamptons, Company House has registered more buy-to-let companies than any other business sector. As of February 2025, the volume of registered buy-to-let companies stands at 401,744, up 332% compared to February 2016. In 2024 alone, 61,517 new limited companies were established, which amounts to a 23% increase from the previous year.
Hamptons said: ‘The limited company is now the structure of choice for the next generation of investors too. We estimate that 70-75% of new buy-to-let purchases now go into a company structure, a figure that has been steadily growing.’
International investment has also assisted this reorientation towards company management. Ryan Etchells, chief commercial officer at Together, said: ‘Non-UK nationals now account for one in five newly established rental property companies in the UK, a notable increase from 13% in 2016. This really highlights growing international confidence in the UK’s buy-to-let market, despite successive changes in tax and regulation, and economic turbulence.’
A Reimaged Market
The direction towards buy-to-let companies has offered many benefits for landlords, including more effective property portfolio management and expansion, the potential to save more in taxation over the long term, and limiting the personal liability of a landlord in the event of potential legal action.
There are, it should be noted, some drawbacks to owning a buy-to-let company. Two noteworthy issues are the initial setup costs and the general maintenance costs for operating a company. Yet these drawbacks point towards an underlying point: many landlords are willing to invest in the buy-to-let market for the long term, seeing the financial, administrative, and legal benefits in establishing and subsequently running a buy-to-let limited company.
Such an investment underscores that landlords are committed to staying in the buy-to-let industry. This period is not one of mass exit, but rather a period of careful strategic redirection, one predicated on landlords carefully considering the most effective means by which to engage with the market for the long term.
