UK Finance has reported that there were 59,489 new buy-to-let (BTL) loans advanced in the UK in Q4 2025, worth £11.2bn.
Its BTL mortgage market update for Q4 2025 showed this was up 18.2% by number and 21.3% by value compared to the same period last year, with most of the growth coming from remortgage activity.
The average gross BTL rental yield for the UK was 7.18% in Q4 2025, up from 6.99% in Q4 2024.
The number of fixed rate BTL mortgages outstanding increased to 1.46 million, while variable rate loans fell 9.8% to 466,000.
The average interest rate on new BTL loans was 4.77%, eight basis points lower than the previous quarter.
The average BTL interest cover ratio rose to 218% in Q4 2025, up from 201% in the same period last year.
There were 9,520 BTL mortgages in arrears of more than 2.5% of the outstanding balance at the end of Q4 2025, down 910 from the previous quarter.
There were 770 possessions, up from 700 a year earlier.
James Tatch, head of analytics at UK Finance, said: “The buy-to-let market overall was resilient at the end of last year, with the number of loans advanced around a fifth higher than at the same time the previous year.
“But, with growth concentrated in remortgage markets, new demand for BTL purchase remains fragile, falling slightly in Q4 compared with the same quarter a year ago.
“Investors took advantage of falling interest rates to refinance their borrowing, although instability in the mortgage market in recent weeks has pushed up borrowing costs, which may well dampen the growth BTL remortgaging somewhat.”
Tatch added: “However, a combination of the regulatory and tax measures already in place, combined with the measures in the Renters’ Rights Bill, which will come into force next month, are likely to continue to weigh down on new demand activity.
“We expect a broadly flat picture for BTL purchase lending this year, compared to levels seen a year ago.”
Raheel Butt, head of underwriting, buy-to-let at MT Finance:
“This data provides a definitive conclusion to a year defined by professional resilience.
“The final quarter saw the momentum of the year-on-year surge in lending value reach its peak. This activity was fuelled by a continued easing of borrowing costs.
“Ultimately, Q4’s performance confirms that the barrier to entry has evolved.”
Butt added: “New entrants are now by-passers of the low-rate lure of the past, instead entering the market with a sophisticated focus on strategic capital gains and long-term portfolio growth.
“Buy-to-let is not just continuing; it is maturing into a more disciplined, professional and institutionalised sector.”
Megan Eighteen, president of ARLA Propertymark:
“Latest figures from UK Finance show buy-to-let resilience, but this is largely driven by remortgaging rather than new investment, highlighting continued fragility in purchase activity.
“Strong tenant demand continues to underpin the sector, providing some stability for existing landlords, although wider economic uncertainty, including global events, may influence borrowing costs in the months ahead.
“However, tax and regulatory changes, alongside the Renters’ Rights Act, which is soon to commence in England, continue to limit new entrants.
“A more balanced approach that supports both tenants and responsible landlords would help encourage investment and improve supply, easing upward pressure on rents over time.”