Guides The Comeback of the Buy-to-Let Scheme

In recent years, the Conservative government made it increasingly challenging to be a property investor. And Labour have now taken those reins and pushed forward the long-awaited Renters Reform Bill, widely seen as another blow to landlords. So, many are asking: can the buy-to-let market make a real comeback anytime soon?

To answer that, we need to look at why the sector was so attractive in the past, what’s changed, and whether those changes are likely to reverse enough to reignite investor interest.

The Glory Days of Buy-to-Let

During the heyday of buy-to-let, interest rates were exceptionally low — often around 2% — and in some hotspots, capital appreciation reached 10–15% annually.

The model was straightforward: buy a property that needed work, refurbish it, and refinance based on the uplifted value, freeing up funds to repeat the process. Alternatively, investors would purchase turn-key properties, wait a couple of years, then remortgage and use the equity to buy again.

This strategy worked brilliantly, until interest rates began to rise.

What Now for Buy-to-Let?

Interest rates, while still elevated compared to the post-2008 era, have started to come down. Does this signal a return of the landlord? Possibly, but not across the board.

There are, broadly speaking, two types of investors:

Long-term Wealth Holders

These are individuals who have inherited wealth or accumulated significant capital and are looking for secure, long-term investments. Often buying in cash or with very low loan-to-value ratios, these investors are less sensitive to mortgage rates and are more focused on legacy planning (e.g., buying for their children’s future). They tend to invest regardless of market cycles.

Professional, Income-Driven Landlords

These investors rely on strong monthly yields. Even with rates dipping slightly, borrowing costs for buy-to-let mortgages remain around 4–5%, and with national rental yields averaging around 6%, it’s difficult to make the numbers stack up after factoring in insurance, maintenance, and void periods. Without reliable capital growth, which has been flat in recent years,  many of these landlords have exited or are sitting on the sidelines.

North vs South Property Investments: Rethinking Location

There’s long been a narrative around investing “up north” for higher yields, and traditionally this came at the cost of slower capital growth. However, this is beginning to change.

Cities like Manchester, Leeds, and even Birmingham are now outperforming London in both rental growth and capital appreciation. Ongoing infrastructure investment, regeneration projects, and strong tenant demand have transformed these markets into serious contenders for investor attention.

At the same time, the rise of purpose-built rental developments and permitted development (PD) schemes have opened the door for portfolio investors. These projects allow greater flexibility, including the ability to sell off some units to reduce debt exposure while retaining others for yield, improving the overall return profile.

Looking Ahead for the Buy-to-Let Scheme

Despite current challenges, the long-term outlook for the buy-to-let market remains positive. Interest rates are expected to continue their downward trend over the next couple of years, which should gradually improve the viability of borrowing for investment.

Most importantly, demand for rental housing is only going one way. Since 2010, the UK population has grown by almost 10 million, and forecasts suggest an additional 3.4 million people by 2034. This level of demographic pressure ensures that rental demand will continue to rise, the key is investing in the right locations, with a strategic, long-term mindset.

Final Thoughts

Property is, and always has been, a long-term game. While the current environment may be difficult, savvy investors who position themselves wisely today are likely to reap the rewards tomorrow.