Gemma Donnelly, head of customer propositions at Gatehouse Bank
A recent webinar poll of property professionals showed that many are less confident in buy-to-let this year, instead favouring the first-time buyers’ market or those seeking a new build property. In some ways, this is understandable, as global financial markets continue to face economic uncertainty and recent regulatory changes in the UK have included updates to stamp duty thresholds and the Renters’ Rights Bill.
However, despite these challenges, there remains a great deal of opportunity for investors who are willing and able to navigate these changes effectively. According to figures released by UK Finance, the appetite for buy-to-let investment is still very much alive, with new buy-to-let refinancing rising by 39% in the last quarter of 2024, compared to the same period the previous year. Rental yields have also seen an increase, reported to have risen by 7.4% in England and Wales in Q1 of 2025.
Opportunities for landlords
This ability to yield consistently high returns on investment remains one of the strongest reasons why investors, particularly those who reside overseas, remain interested in the UK market. There is currently a high demand for properties to let in the UK which is pushing rental prices higher and, according to forecasting by Savills, UK rental growth will be more than 17% over the next five years. It’s important that we support efforts to increase the supply of rental homes to better meet customer demand. At the same time, it’s equally valuable to inform prospective investors about the opportunities available in the rental market. By fostering a well-balanced and responsive housing sector, there’s a potential for both renters and landlords to benefit as the market adjusts to meet evolving needs.
Additionally, the UK offers an incredibly wide range of investment properties, from metropolitan apartment buildings to countryside homes, and this allows each individual investor to find something that best suits their investment goals.
Investors should also not be afraid to turn their attention outside of London because, while London has seen a 13% uplift in buy-to-let landlords between 2023 and 2024 and continues to be a major hub for investment, the top region in terms of rental yields is now the North-East. Cities in the North of England such as Sunderland, Leeds and Newcastle are proving particularly attractive as demand from young professionals and students, as well as an increase in modern developments, make these popular investment choices. These factors are also the driving forces between cities such as Birmingham, Bristol, Manchester, Leeds and Edinburgh performing well.
For overseas investors in particular, the UK market continues to be seen as a historically stable option with strong laws and policies in place. One such draw in English property law being that international investors are able to deduct tax from expenses such as property management fees, maintenance and insurance which can help mitigate other costs.
Driving more choice for financing property in the UK
While the market is shifting, so are the needs of consumers and investors, particularly as research shows an increasing appetite for alternative finance types, including Islamic, green and ethical finance. Recent Gatehouse Bank research found that almost half (45%) of UK homebuyers would consider using an ethical finance provider that follows Islamic principles.
As a Shariah-compliant provider, we are observing these changing needs first-hand and are proud not only to be helping investors achieve their home ownership goals but also providing an alternative to conventional finance which is accessible to everyone, including expat and international investors seeking ethical, globally minded solutions.
Despite recent news around fluctuating confidence in the market, there is no shortage of reasons why the UK is still a viable and potentially highly lucrative option for buy-to-let property investors. While the market is certainly undergoing a period of change, there is no reason why it cannot continue to provide a wealth of opportunities for those willing to move and adapt with it.