It is becoming more and more expensive to become a landlord. With changing tax rules, rising mortgage rates, and increasing regulation, you’re probably wondering “Is buy to let still worth it?”.
That’s what we’ll be exploring in this blog post. Read on for all the up-to-date information you need about buy-to-let in 2025, and whether it can still provide steady returns.
What’s Changed in the Buy-to-Let Market in 2025?
The buy-to-let market in 2025 has drastically changed in the last decade – and even in the last couple of years. Here are some of the main updates in 2025.
No More Section 21 ‘No-Fault’ Evictions
As a landlord, if you wish to evict a tenant, you will now need to use Section 8, which has been modified to address property sales and serious arrears. This makes the eviction process more formal, giving more power to renters.
Assured Shorthold Tenancies Replaced
Assured Shorthold Tenancies (ASTs) are being phased out as part of the Renters Reform Bill. This means tenancies will become periodic assured tenancies, which have no fixed end date. This gives tenants more stability and flexibility, but may also make it more difficult for landlords to evict tenants without a valid reason.
The Renters’ Rights Bill, which will abolish ASTs in favour of periodic tenancies, is expected to come into effect between October 2025 and January 2026.
Stricter Rent Increase Procedures
The 2025 reforms will make it more difficult for landlords to raise rent. Rent increases will be limited to once per year, and any increase must reflect the current market rate, preventing landlords from implementing excessive or arbitrary hikes.
As a landlord, if you wish to raise rent, you must do so using the Section 13 notice procedure, which involves issuing a formal notice to the tenant outlining the proposed new rent and the date it will take effect. You must give at least two months’ notice to raise rent. tenants will also be able to challenge rent increases through a First-tier Tribunal.
Ban on Rental Bidding Wars
The Government has banned rental bidding wars to make the lettings process more fair for tenants. This means that as a landlord, you must advertise properties at a fixed rental price – and you can no longer encourage or accept offers above that advertised amount in a competitive bidding scenario. All prospective tenants must be considered equally based on the advertised rent.
Higher Mortgage Rates
Buy-to-let mortgage rates are still significantly higher than they were during the era of ultra-low borrowing costs.
This means that as a landlord, you can expect increased monthly repayments, reduced profit margins, and tighter affordability tests—especially for new investors or those looking to remortgage. Lenders have also become more cautious, and some require buy-to-let deposits of up to 40%.
Ultimately, the cost of entry into the buy-to-let market has increased – making it harder for aspiring landlords to enter the market.
What Tax Do Landlords Pay in 2025?
The tax you pay as a landlord can have a huge impact on your profits. Here’s a breakdown of what taxes you may be required to pay as a landlord in 2025:
| Tax Type | Description | Notes/ Updated 2025 |
| Income Tax | Tax on rental profits after expenses | No full mortgage interest relief for higher-rate taxpayers – all landlords receive a 20% tax credit on mortgage interest. |
| Capital Gains Tax | Tax on profit when selling the property | Annual exemption is £3,000. Rates are 18% (basic-rate) and 24% (higher-rate) for residential property sales. |
| Stamp Duty Land Tax | One-off tax on property purchase | 5% surcharge (up from 3%) on top of standard rates for second properties from April 2025; new bands apply. |
| National Insurance | For landlords operating as a business | Applies only if HMRC considers your activity a business (e.g. property trading, not passive letting). |
| Corporation Tax | For landlords using a limited company | 25% rate as of 2025 – companies do not benefit from personal CGT allowance. |
Are There Any Tax Benefits to Buy-to-Let?
Yes, there are several tax benefits to buy-to-let depending on how you invest…
- If you hold properties in a limited company, you can fully deduct mortgage interest as a business expense before paying corporation tax.
- As an individual landlord, you receive a 20% tax credit on your mortgage interest
- You can deduct certain costs (e.g letting agent fees, repairs, insurance etc) from your rental income
- You can claim the actual cost of replacing furnishings (replacement of domestic items relief), but only for standard residential buy-to-lets
- The CGT annual exemption is £3,000, with the higher rate for residential property being 24%
Want more information on buy-to-let and how it works? Check out our complete guide to buy-to-let!
How to Get Into Buy-to-Let in 2025
Although it is becoming increasingly difficult to get into the buy-to-let market, it is still possible. Here are some simple steps:
- Make sure you have a sufficient deposit – usually at least 25% of the value of the property. See our guide on how much deposit you need for a buy-to-let.
- Opt for an area with a strong rental demand, good rental yields, and the potential for capital growth. The location of your buy-to-let property can make or break your profits.
- Decide on the type of property – for example, HMOs, student lets, or single family homes.
- Secure a mortgage. This is something we can help with at JG Mortgage Services Ltd. We can find the best deal for your situation – check out our buy-to-let page to get started.
Are Landlords Leaving the UK Market?
Yes – more landlords are leaving the UK market due to falling profitability and regulatory changes. There appears to be a mass landlord exodus from the UK private rental sector.
Around two-thirds of landlords in the UK plan to either leave the rental sector completely or reduce their property portfolios.
Large numbers of landlords are also choosing to invest through limited companies to remain profitable. This is because it is more tax-efficient to do so. Properties owned by a limited company can deduct mortgage interest as an expense before tax.
There’s no denying that the buy-to-let market is seeing a shift. However, this could also lead to opportunity if you’re an aspiring landlord willing to navigate these new changes.
How Profitable is Buy-to-Let in 2025?
Profitability depends entirely on where you invest and how you structure your property portfolio. It can depend on factors such as:
- Rental yields
- Ongoing costs such as tax, insurance, mortgage repayments and maintenance
- Capital growth (which is slower than in previous years)
Rental yields are rising, with private rents rising 8.7% in the 12 months leading to January 2025 – and average rent is around £1,375. This is a good figure, but you must also consider the additional costs.
Mortgage rates are now typically between 5% and 6%, which can eat into your monthly outgoings and squeeze profit margins. Other costs such as insurance have also seen a rise, making buying less profitable overall.
Buy-to-let is generally more profitable if you move into a limited company structure to regain tax advantages. Despite these challenges, buy-to-let can still be a great option if you’re willing to adapt to these changes.
Passive income is never guaranteed with buy-to-let.
So, Is Buy-to-Let Still Worth It?
Buy-to-let in 2025 isn’t as simple or as profitable as it once was. However, if you are willing to do the research, optimise your tax position, and take a long-term view, it can still be worthwhile.
If you’re thinking about entering the buy-to-let market, speak to a mortgage adviser and weigh up the pros and cons based on your personal goals.
This is something we can help with. Contact us today to explore your options in the 2025 buy-to-let market.
