The UK’s private rental sector has undergone several notable changes in recent years. There are numerous factors at play, including changes in tenant expectations, government policy, tax reforms, and resulting financing choices made by investors.
Tax reforms have had a big impact on how landlords invest in property. The removal of mortgage interest tax relief and implementation of a flat 20% tax credit in its place drove professional landlords to incorporate as it helped regained a balance in profitability. Lenders had to adapt and change to fulfil this need.
- Limited company buy to let mortgages
One of the most prominent trends in recent years has been the rise of limited company buy to let mortgages. These are mortgages obtained through a limited company as opposed to personal finance, which offers tax benefits due to reforms on rental profits in recent years. These mortgages have facilitated the growth of professional investors who manage large and diversified investment portfolios.
For those interested in obtaining a limited company buy to let mortgage, it is wise to speak with a specialist mortgage advisor, who will be able to find the best product for your needs and streamline the process.
- The rise of specialist lenders
Another notable financing trend in recent years has been the rise of specialist lenders. High street banks remain a common source of finance for investors, but many are now turning to specialist lenders who primarily focus on buy to let and commercial mortgages. There are a few benefits to this approach:
- Wider range of products available
- Faster decision-making
- Tailored solutions
- Expert advice
- Flexible underwriting
- Bridging loans
Following on from a record end to 2024, Q1 2025 experienced a strong start for bridging finance. Bridging loans offer a short-term borrowing solution that can be a transitional financial arrangement – investors may need to access cash fast, be buying at auction, or need to borrow against a property that is unmortgageable, because it needs renovating.
Bridging loans can be accessed quickly, are short-term and highly flexible, which makes them a great option for the fast purchase of properties (such as at an auction) and for refurbishment projects. Given these uses, they are often a first step with finance leading on to longer term borrowing.
Sustainability
As with most industries, sustainability is a huge concern in 2025. The Labour government intends to make higher Energy Performance Certificate (EPC) ratings – between ‘A’ and ‘C’ grades – mandatory across the UK private rental sector by 2030.
In the UK rental market, lenders are becoming increasingly mindful of energy performance and favour properties that have energy-efficient features. Some lenders offer incentivized mortgage interest rates for homes with better EPC grades.
With lenders favouring sustainable properties and strong demand from tenants both in terms of environmental impact and lower energy bills, landlords need to keep sustainability in mind when it comes to design and upgrade decisions.
These are the main finance trends that are reshaping the UK private rental market in 2025. Being prepared to swiftly adapt to an evolving market is always critical. For private landlords or would-be property investors, it will be important to keep a close eye on these trends.
