Buy to let - Is it still a profitable investment in the UK?

The UK’s buy-to-let (BTL) market has consistently attracted landlords, expats and foreign investors seeking consistent rental income and long-term capital growth. However, in recent times, with the rising interest rates, tax changes and evolving regulations, many are questioning if buy-to-let is worth it in 2025.

This guide breaks down the latest challenges and opportunities for buy-to-let investors — ensuring you have all the information to know if buy-to-let is a good investment.

Why invest in buy-to-let?

The first thing investors need to figure out is why investing in buy-to-let is beneficial -

• BTL offers steady rental demand. Thanks to the UK’s rapidly rising tenant population, consistent rental income for landlords is assured
• Another factor is capital growth potential properties in sought-after UK locations, including most of London, continue to appreciate over time
• Buy-to-let is an excellent way to invest in a safe, tangible asset – unlike riskier alternatives such as stocks or cryptocurrency
• Landlords can generate hassle-free income through buy-to-let properties in London with professional property management services

Latest BTL trends

Most overseas investors view the UK property market as a stable and long-term investment. Due to this, expats are rapidly investing in this market, taking advantage of the weaker pound value. Thanks to the UK’s convenient refinancing options, most seasoned investors are making the most of this period by expanding their property portfolios.

The shortage of affordable housing is the primary reason landlords are able to benefit from higher rental yields. Despite regulatory challenges, buy-to-lets in London command the highest average rents in the UK. In fact, by the end of 2024, the average monthly rent in London rose to £2,188. The same report further stated that rents in London are expected to increase at a 3-4% rate in the next 12 months.

ONS figures reveal that the average rent in January 2025 in Westminster was £3,291, while in Kensington and Chelsea, it rose to £3,615 PCM.

In other good news, demand for rental properties in London remains about 30% above pre-pandemic levels. With hybrid and full-time office work returning, rental units in central London are expected to see renewed demand from working professionals.

Key financial considerations

The Bank of England recently reduced its interest rates from 5% in August 2024 to 4.5% in February 2025 — making BTL investments more affordable. Besides, rental growth in London is exceeding property price growth, in return, increasing rental yield — a key feature in property experts' predictions for 2025.

Difference between short-term & long-term BTL

• Short-term lets, such as Airbnb and serviced apartments, offer higher yields but stricter regulations and are more management-intensive
• Landlords offering student accommodation benefit from consistent demand but require yearly tenant turnover
• Corporate lets are ideal for reliable tenants and longer contracts but present a limited market
• If you’d prefer more stability but lower yields compared to short-term lets, long-term residential lets are an option

With the latest reforms in place, if interest rates continue to drop, it’s best to refinance instead of selling. This move helps improve cash flow and long-term profitability.

Expert Tip - We advise you to choose a strategy carefully, based on your risk appetite, management capacity and the local rental market

Assisting Indian investors through our offices in India

With a vast experience in the London property market for almost seven decades, Benham and Reeves established its offices in India in 2011. Since then, our experienced team of property experts have played a crucial role in assisting Indian investors in buying, managing and renting properties in London. With offices in central hubs like Mumbai and Delhi, Benham and Reeves can handle property sourcing, price negotiation, handover and furnishing services on your behalf.

Moreover, with operations spread over 21 branches across London, our local Indian team will ensure investment advisors and financial consultants cater well to your unique needs as an Indian investor. If you are planning a trip to London, business or leisure, we can set up well-structured property viewings in liaison with our London team.

To learn more about letting your London property as an Indian investor, you can click here.

Concluding thoughts - Is buy-to-let still worth it?

While challenges linger around BTL, this form of investment stands as a lucrative investment strategy if approached with a well-planned strategy. With the right type of assistance on financing, location and property management, you can enjoy strong returns and capital appreciation.

If you’d like to explore London’s vast buy-to-let market and need professional guidance, get in touch with our team today.