Market shifts in 2024 have led some investors to question whether buy-to-let remains a viable investment strategy in 2025. Are buy-to-lets still worth it in 2025? In this article, we’ll explore why now could still be one of the best times to enter the property market and what buy-to-let investments have to offer in 2025.
How The Property Market Is Changing In 2025
Due to economic, cultural and geopolitical shifts, the property market is set to experience significant changes in 2025.
Stamp Duty
The government introduced a number of changes to Stamp Duty Land Tax (SDLT) during the 2024 Autumn Budget, which has influenced property investors’ decisions. The SDLT on the purchase of second properties has increased by 2% from 3% to 5% on purchases over £250,000. This threshold is set to lower at the end of March 2025 to £125,000, which would be liable to a SDLT charge of 2% from April 1st.
For example, if an investor purchased a property worth £165,000, that would mean that the investor would be liable to pay £9,050.00 in Stamp Duty for that property.
If you would like to calculate how much Stamp Duty you may owe, please use our free Stamp Duty calculator.
Property prices
The UK’s property prices increased significantly from 2024. From January 2024 to January 2025, there was a 10% jump in the price of property. This surge was driven by the growing housing demand and a limited supply of available properties.
Renters rights bill
While the Renters Rights Bill was not introduced in 2024, steps were taken to bring the bill into legislation. The bill has passed multiple readings in the House of Commons and is set to be introduced during 2025. This bill will empower renters with protections from Section 21 evictions, fixed-term tenancies, and new rules on rent increases. This has led to calls from landlords to increase rents, particularly in regions such as the North West, where rents have been historically lower than in southern England.
Click here to read our article breaking down the details of the renters rights bill
Rising demand
The demand for rental properties remains as strong as ever. As housing prices increase, it has become harder for first-time buyers to enter the market. As a result, more people opt to live in rental properties instead. Moreover, many tenants are now choosing to move to city centres rather than in the suburbs, due to the convenience and availability of job opportunities.
Cost of Living
As the cost of living rises, affordability has become a key concern for renters on lower incomes. While average rents have climbed 40%, wages have only increased by 28%. These renters are becoming more mindful of their budgets, leading them to seek more affordable options.
26% of tenants have proactively approached their landlords to request rent reductions, up from 23% last year. This shift suggests that rent increases may become more selective, aligning better with the financial constraints of some tenants.
Why buy-to-let is still worth it in 2025
In light of these developments in the property market, here are some reasons why buy-to-let is still worth it in 2025 for property investors.
Capital Growth
Property values are projected to keep growing over the next year. 2025 has already made an emphatic start, with prices increasing by 0.1%, marking the highest rate of growth since 2022. Early indicators suggest that 2025 will be another strong year for the UK property market. Buy-to-let investors can look forward to their properties’ values appreciating, enhancing their assets and making them more attractive to buyers.
Strong Rental demand
As the tenant demographic in the UK continues to grow, landlords are poised to benefit from consistent rental demand. Rightmove forecasts a 3% rent increase across both London and the rest of the UK, offering a promising outlook for investors. Cities like Manchester and Liverpool are seeing heightened rental demand in particular, due to their lower costs, expanding job opportunities and appealing lifestyle options.
Passive income
Traditional buy-to-let properties offer investors an excellent opportunity to generate passive income. Passive income is an ideal way to grow wealth without dedicating a significant amount of time or effort. Property has long been a more stable and proven method of generating passive income compared to stocks, cryptocurrency, or other more investments.
By collecting monthly rental payments from tenants, landlords can secure a steady income stream. Many choose to hire a property management company to handle the day-to-day responsibilities, further reducing the time commitment involved. Advantage’s management company, Advantage Lettings & Management, offers competitive pricing, with just a 10% fee based on the rental income. This allows you to earn passive income without the hassle of management.
Increased Housebuilding and Regeneration
The Labour government has committed to building 1.5 million more homes in the UK by the end of their term in Parliament, and that is set to significantly pick up pace over 2025. This will cover the whole of the UK with particular emphasis on regenerating brownfield sites. This will create more opportunities for investors to benefit from the housebuilding efforts and invest in new properties. Many of these properties will be off-plan, meaning that investors will have an opportunity to capitalise on below-market value constructions.
Key locations across the UK are undergoing significant regeneration efforts. Along the Liverpool waterfront, five new neighbourhoods are being developed, with work on the central docks’ redevelopment set to begin later this year. Progress has already been made in transforming the Vauxhall area, which is evolving into a new creative hub in Liverpool.
In Manchester, new plans have been announced for the Old Trafford regeneration scheme, which will rejuvenate the area around the Old Trafford stadium, creating more housing. While this is set to be a years-long project, work could begin by the end of 2025, if the planning moves along as expected. Our Trafford off-market property is ideally located, and will greatly appreciate and become more desirable as the area’s redevelopment progresses.
Investing off-plan presents an excellent opportunity for buy-to-let investors who are willing to wait longer for their property to be ready and receive regular rental income.
Things To Consider When Investing In A Buy-To-Let in 2025
While investing in buy-to-let properties in 2025 is still worthwhile, there are key factors investors should consider before making a decision.
Location
Choosing the right location is crucial to the success of your buy-to-let strategy. Properties in areas with strong demand, excellent amenities, and good quality of life will attract more tenants. Researching an area’s rental yield, average property prices, and tenant demographics will help you better assess the potential return of your investment.
Financial Considerations
When purchasing a property, it’s important to factor in all associated costs. Stamp Duty, taxes, solicitor fees, and additional legal expenses can all add up, but with careful planning, you can factor them into your overall investment strategy. For example, if you buy a property worth £250,000, there could be an additional £12,500 in Stamp Duty if you own a second property.
Property Management
After purchasing your property, you’ll need to decide the management approach. You can either manage the property yourself or hire an external property management company to handle everything. Property management companies typically cost around 10-15% of the rental income, but this can ease your workload as an investor.
If you would like to hear us talk in more detail about what to consider when you are investing in property, watch our podcast The Wealth Blueprint’s episode ‘How To Get Started In Property Investment’ to learn more. Listen on your podcast provider of choice or watch here.
Invest in 2025 with Advantage Investment
Despite the changes in the property market in 2024, 2025 still presents a prime opportunity to invest in buy-to-let properties. With rising rental demand, new housebuilding projects, and lower interest rates, the market is positioned for growth.
Advantage can help you highlight the opportunities available in the market and guide you to the best properties available. If you would like to maximise your prospects at creating wealth, reach out to us today via our contact page.
