BTL Landlords Continue to ‘Invest Strategically’ as Rents Rise

Why It Matters

The trend signals sustained demand for rental housing and reinforces the sector as a reliable investment amid affordability challenges, shaping future supply and pricing dynamics.

Key Takeaways

• National average rent hit £1,602 PCM, up 4.9%.
• South Coast rents surged 10.5%, leading UK growth.
• London rents rose 1.5%, still 49% above national average.
• BTL mortgages now 8‑9% of new loans, stabilising.
• Scotland saw 38% rise in landlord instructions despite rent dip.

Pulse Analysis

The latest Lomond Quarterly Insights reveal that the UK rental market closed 2025 on an upward trajectory, with the national average rent reaching £1,602 per calendar month – a 4.9% year‑on‑year increase. Growth was far from uniform; the South Coast posted a striking 10.5% jump to £1,774, driven by tight supply of well‑maintained two‑ and three‑bedroom homes in Brighton, Southampton, Portsmouth and Worthing. London’s rents rose modestly by 1.5% to £2,395, yet remain nearly 50% above the countrywide average, underscoring persistent premium demand in the capital.

Landlord activity remains robust despite a challenging policy backdrop. The Renters’ Rights Act and recent budget measures have tightened regulations, yet buy‑to‑let investors continue to allocate capital, as evidenced by a 38% surge in new landlord instructions in Scotland and steady demand for move‑in‑ready properties nationwide. Mortgage data shows BTL lending stabilising at 8–9% of all new mortgages, reversing a sharp decline seen between 2023 and 2024. This cautious optimism reflects a strategic shift: landlords are prioritising energy‑efficient, well‑maintained units that align with tenants’ heightened focus on running costs.

The continued rent escalation and stable financing environment signal a resilient asset class for institutional and private investors alike. Higher yields in regional hotspots such as the South Coast make these markets attractive alternatives to the capital’s premium pricing, while tenants increasingly value sustainability and cost transparency, prompting landlords to upgrade insulation and smart‑metering. Looking ahead to 2026, the sector is likely to see incremental rent growth, modest mortgage volume, and a gradual shift toward premium, energy‑efficient stock, positioning the UK rental market as a key driver of housing supply amid ongoing affordability pressures.