For UK buy to let landlords, the market over recent months has rarely felt straightforward. Mortgage rates had remained sensitive, regulations continued to tighten, and many landlords had been forced to reconsider the structure of their portfolios altogether.
This update looked at what has been happening across the UK property and mortgage markets and, more importantly, what those changes mean for landlords planning over the following six to twelve months.
Mortgage rates: Calmer, but not settled
In the weeks leading up to mid‑April, SWAP rates softened slightly. 5‑year SWAPs dipped briefly below 4%, prompting a small number of lenders to cautiously reduce buy to let mortgage rates.
However, that movement failed to hold consistently. 5‑year SWAP rates moved back to just above the 4% mark, leaving most 5‑year fixed buy to let mortgages priced somewhere between 5% and 6% once fees were taken into account.
The overriding theme now is stability rather than improvement. Lenders remain reluctant to reprice aggressively, largely due to ongoing economic uncertainty, and many have built additional profit margin into their products to mitigate further changes. While frustrating, this approach has at least brought a period of relative calm after months of constant rate withdrawals and repricing.
>> Search thousands of buy to let mortgages here.
Strategy for landlords approaching remortgages
Landlords who are due to remortgage within the next 6 months are often better served by securing a rate early. Most lenders still allow borrowers to switch to a lower rate later if pricing improves, providing downside protection while maintaining flexibility.
Renters’ Rights Act and the eviction rush
One of the most significant regulatory changes affecting landlords is the introduction of the Renters’ Rights Act, which comes into force on 1 May.
In advance of the deadline, a sharp increase in Section 21 notices has been widely reported. This reflects concern among landlords who will soon lose the ability to regain possession using a no‑fault eviction route. Once Section 21 is abolished, evictions will rely on court‑based processes, which historically take anywhere from 6 months to over a year, depending on the region.
While many landlords are careful not to act unnecessarily, the surge is understandable, particularly where there are concerns about arrears, affordability, or the long-term suitability of a tenancy.
Key changes under the Renters’ Rights Act include:
- The abolition of Section 21 evictions
- All tenancies moving to rolling periodic agreements
- Rent increases limited to once per year and capped at market levels
- Mandatory landlord information requirements, with significant fines for non‑compliance
- A ban on blanket discrimination against tenants with children or those in receipt of benefits
- Strengthened rights for tenants to request pets
Importantly, the legislation is robust and will be actively policed. Therefore, early preparation is essential to help landlords avoid costly mistakes or non-compliance.
>> For more on the Renters’ Rights Act, visit our Hub here.
Why more landlords are turning to HMOs
Against a backdrop of higher interest rates, tax changes and increasing regulation, landlord profitability continues to face pressure. As a result, many landlords are exploring ways to improve cash flow, with HMOs (houses in multiple occupation) attracting renewed attention.
HMO properties rented by the room typically produce significantly higher gross income than standard single‑let buy to let properties. In many regions, gross yields of 8–10% are achievable, with some northern cities offering even stronger returns.
Demand is being driven by:
- Young professionals priced out of self‑contained rentals
- Key workers and recent graduates
- Tenants seeking affordability as rents rise
In practical terms, renting a room within an HMO often costs around half the price of a 1‑bed flat, making shared accommodation increasingly attractive.
As a result, many landlords are either shifting their focus geographically towards higher‑yielding regions such as the North and Wales, or diversifying into higher‑yielding asset types such as HMOs, multi‑unit properties and semi‑commercial assets. While these strategies are attractive, they also require specialist lending advice due to additional licensing, planning and mortgage considerations.
Rental market trends: Slowing growth, not falling rents
Rental demand has cooled modestly, with fewer tenants competing for each available property than at the market peak. Supply has increased slightly, easing the imbalance that drove sharp rent rises in previous years.
Average UK rents remain historically high at around £1,400 per month. Rents continue to rise, but forecasts suggest growth of only 2–2.5% this year, marking a clear slowdown from prior years.
Affordability constraints act as the key limiting factor. To comfortably afford average rents, tenants generally need earnings of around £40,000 per year, which is well above the UK average salary. This pressure is driving:
- Increased demand for smaller units and shared accommodation
- Continued interest in lower‑cost regions
- Softer demand for higher‑end rental stock
Developments in Scotland: A warning signal
Landlords are also closely watching proposals emerging from Scotland, where tenants could potentially be granted first refusal to buy if a landlord decides to sell.
While the proposal initially appears reasonable, it raises significant concerns about valuation, timing, and the possibility of forced sales at below-market value. Questions remain over how a “fair market price” can be properly established without exposure to the open market.
Although limited to Scotland at this stage, the proposal reflects a wider political direction favouring tenant protection and increased home ownership. Many landlords view it as an early warning of ideas that could be debated more widely elsewhere in the UK.
Final thoughts
Interest rates are just one issue among many for buy to let landlords. Regulation, compliance, and long‑term strategy increasingly dictate portfolio performance.
Speak to an expert
Whether you’re remortgaging, considering HMOs, restructuring your portfolio or ensuring regulatory compliance, early professional advice plays a critical role. An informal conversation at an early stage often provides clarity well before key decisions are needed. Call us on 0345 345 6788 or submit an enquiry here.
