Buy-to-let lending increased by 22.7% year-on-year in Q3 2025 in terms of volume, UK Finance data found.
In all, 59,467 buy-to-let loans were issued, amounting to £10.9 billion.
Profitability has improved for landlords, as the average gross buy-to-let let rental yield was at 7.15% in Q3, rising from 6.93% the same quarter last year.
Howard Levy, director of mortgage broker SPF Private Clients, said: “Many smaller portfolio landlords who held 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 this still rising demand.
“Looking at any specific quarter is slightly misleading as the various changes that occurred in 2024 with taxation, relief and the SDLT surcharge increase delivered in the October Budget of 2024 could have skewed the figures that quarter.
“It will be interesting to see if the number of loans advanced reverts back next quarter as compared to Q1 2025.”
The typical buy-to-let interest rate was 4.85% in Q3 2025, down from 5.00% in Q2 2025.
Meanwhile the average buy-to-let interest cover ratio (ICR) was 215% in Q3 2025, up from 195% in Q3 2024 and 210 from the previous quarter.
Levy added: “For me the most interesting point is that the ICR coverage was 215%. This would potentially mean that rates were booked and fixed at a low point, that LTVs are low on average or rents have risen drastically.
“In reality, it is probably a combination of all of these, but if rents do continue to rise to cover the extra costs that the government are requiring landlords to pay, then we can expect this figure to rise even further.”
Possessions numbers worsened, as there were 900 buy-to-let mortgage possessions in Q3 2025, up from 700 in Q3 2024.
Marylen Edwards, director of mortgages at specialist lender MT Finance, said: “Despite the headwinds of 2025’s rate environment, it is clear the sector is still actively transacting and business continues to grow.
“The Q3 data reveals a definitive flight to quality, where equity-rich, professional investors are capitalising to strengthen and diversify their portfolios. New landlords coming into the market are looking at longer-term strategic capital gains and the ability to uplift and grow a portfolio.”
