The recent introduction of the Renters’ Rights Act is poised to significantly impact the UK mortgage market, particularly for buy-to-let (BTL) investors. As regulatory pressures mount, landlords may face increased challenges, potentially leading to a contraction in BTL mortgage availability.
TL;DR: BTL mortgage advances fell by around 40% in 2025 compared to 2022; the Renters’ Rights Act may further limit growth in the mortgage market, affecting landlords and investors.
What does the Renters’ Rights Act entail?
The Renters’ Rights Act introduces critical changes, including the removal of Section 21 evictions, which previously allowed landlords to evict tenants without cause. This shift means landlords must now rely on fault-based evictions, which could prolong possession timelines and lead to increased carrying costs. As landlords navigate these new regulations, the operational market for BTL investments is changing.
How has the BTL mortgage market been performing?
According to Morningstar DBRS, BTL mortgage originations saw a rebound in 2024 after a significant contraction in 2023, followed by a period of stabilization. However, the market remains under pressure, with BTL mortgage advances declining by approximately 40% in 2025 compared to levels seen in 2022. The ongoing effects of regulatory changes, alongside broader macroeconomic challenges, are expected to further limit growth in 2026, keeping BTL mortgage activity below pre-2022 levels.
What this means for landlords and investors
Landlords may find themselves in a more precarious position as the Renters’ Rights Act takes effect. The reliance on fault-based evictions could lead to longer waiting periods for possession, increasing the financial burden on landlords who may already be facing higher carrying costs due to rising interest rates and inflation. Investors should prepare for a more challenging environment, as the potential for reduced rental yields and increased operational costs could affect overall profitability.
What should borrowers and brokers watch for?
Borrowers and brokers should closely monitor the evolving regulatory market and its implications for the mortgage market. With BTL mortgages in arrears having moderated after a spike in 2022, the current levels still remain above earlier benchmarks. This indicates that while some recovery is evident, the market is still vulnerable to shifts in regulatory and economic conditions. Staying informed about changes in the BTL mortgage market will be important for making sound investment decisions.
Frequently asked questions
How will the Renters’ Rights Act affect my BTL investments?
The Renters’ Rights Act may lead to longer eviction processes and increased costs for landlords, potentially impacting rental yields and overall profitability.
What trends should I be aware of in the mortgage market?
Watch for ongoing regulatory changes and macroeconomic factors that could affect BTL mortgage availability and performance, particularly as the Renters’ Rights Act is implemented.