"Landlords play a vital part in our society, so while tenant protections should be welcomed, and taxes paid fairly based on income, the government must also be careful not to drive such radical change that it causes large numbers of landlords to exit the sector"
- Marc von Grundherr - Benham and Reeves.
Buy-to-let mortgage lending has increased by more than 20% over the past year, signalling continued confidence among UK landlords despite significant tax and regulatory changes on the horizon.
Research from London estate agency, Benham and Reeves, shows that landlords are continuing to acquire property assets even as reforms such as Making Tax Digital and the Renters’ Rights Act introduce new compliance requirements.
Buy-to-let mortgage lending remains strong
Analysis of Bank of England data indicates that £25bn worth of buy-to-let mortgages were issued in 2025, marking a 20.2% increase compared with 2024.
The final quarter alone accounted for £6.7bn, making it the strongest period of the year and reinforcing the strength of investor appetite.
This sustained growth challenges earlier expectations that regulatory changes would prompt landlords to exit the sector. Instead, many appear to be adapting their strategies while maintaining exposure to property investment and rental yields.
What’s changing for UK landlords
From April 2026, landlords will face a series of operational changes, led by the introduction of Making Tax Digital for Income Tax.
Landlords earning over £50,000 annually will be required to:
- Maintain digital financial records
- Submit quarterly updates on income and expenditure
- File a final annual declaration
A new penalty points system will also apply for missed deadlines, increasing the compliance burden.
Alongside tax reform, the Renters’ Rights Act will introduce structural changes to the private rented sector. These include stronger tenant protections, the removal of no-fault evictions, and revised tenancy arrangements that may make it harder for landlords to regain possession.
Together, these reforms are expected to increase both administrative workload and legal complexity for landlords managing rental portfolios.
Impact on buy-to-let investors
Despite these changes, current lending data suggests that landlords continue to view property as a stable long-term investment.
However, the operating environment is becoming more demanding. Increased compliance requirements, reduced flexibility, and tighter regulation may affect:
- Mortgage affordability calculations
- Rental yield performance
- Portfolio expansion strategies
- Long-term investment returns
As a result, landlords may need to reassess how they structure and manage their investments.
Further tax changes ahead for landlords
Additional reforms expected from April 2027 could have a more direct impact on profitability.
Under proposed changes, rental income would be taxed under separate bands:
- 22% for basic rate taxpayers
- 42% to 45% for higher-rate taxpayers
- 47% for additional rate taxpayers
This represents an effective 2% increase on rental profits and would apply regardless of other income sources. These changes could significantly influence landlord sentiment and investment decisions across the UK property market.
“The buy-to-let sector has shown remarkable resilience in the face of sustained regulatory pressure, and the latest lending figures highlight that confidence in property investment remains strong, something I’ve reflected in my own approach, having recently agreed to purchase a one-bedroom flat in Kensington as a buy-to-let investment,” said Marc von Grundherr, director at Benham and Reeves.
“However, there is no doubt that the changes coming in 2026 and especially in 2027 will test that resilience. Increased administrative requirements, reduced flexibility, and higher taxation will all weigh on profitability, and it is these longer-term financial implications that are most likely to influence landlord behaviour moving forward."
He added, "Landlords play a vital part in our society, so while tenant protections should be welcomed, and taxes paid fairly based on income, the government must also be careful not to drive such radical change that it causes large numbers of landlords to exit the sector. This would serve only to diminish supply and increase rent values for tenants who are already facing the likelihood of another difficult cost-of-living period over the coming months.”
What happens next for the UK property market
While buy-to-let mortgage lending remains robust, the next phase of tax reform could prove more decisive in shaping landlord behaviour.
Short-term resilience suggests continued investment activity, but rising tax burdens and tighter regulation may test confidence over the longer term. The trajectory of the buy-to-let sector is likely to depend on how landlords adapt to these changes and whether returns remain attractive in a more regulated environment.
