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Buy-to-let rebounded in the third quarter of last year after months of doom and gloom following tax changes and an overhaul of the market with the Renters' Rights Act.
Between July and September, UK Finance, the trade body for most leading lenders, revealed 59,467 new buy-to-let loans worth £10.9 billion were advanced. This was up 22.7 percent by number and 28.2 percent by value compared with the same quarter in the previous year.
Landlords borrowed £7.7 billion for remortgages - 37 percent up from Q3 2025 - and 8.2 percent or £2.8 billion more for buying new properties. These numbers translate into 16,885 homes bought and 40,697 refinanced.
Landlords spent £442 million on flats, £172 million on buying new houses and £162 million on houses in multiple occupation (HMOs).
The average gross rental yield climbed to 7.15 percent, compared with 6.93 percent a year earlier.
Yields are holding steady - moving up 0.24 percent in England to an average of 6.98 percent and 0.08 percent in Wales to 7.59 percent.
Average interest rates across all new buy-to-let loans was 4.85 percent in the quarter - 15 basis points lower than in the previous quarter, and 37 basis points lower than in the same quarter of 2024.
Reflecting the downward movement in interest rates, the average buy-to-let interest cover ratio (ICR) edged up to 215 percent, up from 195 percent in Q3 2024 and 210 in Q2 2025.
The ICR is a stress test applied by lenders to ensure landlords can afford a buy-to-let loan.
Buy-to-let fixed rate mortgages outstanding in Q3 2025 was 1.44 million, 2.3 percent up from Q3 2024. The number of variable rate loans outstanding fell by 9.7 percent to 488,000.
At the end of Q3 2025, there were 10,420 buy-to-let mortgages in arrears greater than 2.5 percent of the outstanding balance - down 850 or 20 percent from the previous quarter.
However, although arrears dropped, 900 buy-to-let homes were repossessed by lenders in the quarter, up 28.6 percent from 700 in the same quarter a year earlier.
SPF Private Clients director Howard Levy said: "Smaller portfolio landlords who held property in their own name have left the market, which has paved the way for the larger buy-to-let investors to provide the stock for the rising demand.
"Looking at any specific quarter is slightly misleading as the various changes that occurred in 2024 with taxation, relief, and the stamp duty surcharge increase delivered in the October Budget 2024 could have skewed the figures."
More information: UK FInance Buy-to-let Mortgage Market Update Q3 2025