Buy-to-Let in 2025: Is it time to sell?

Buy-to-let (BTL) investments have long been seen as a reliable way to generate income and build wealth, whether as part of a broader investment strategy or as a supplement to pension planning. However, the environment for landlords in 2025 is proving increasingly difficult to navigate, so it's no surprise that we’ve seen a noticeable uptick in enquiries from clients questioning whether it’s time to sell their buy-to-let property or second homes, or, in many cases, having already done so.

This shift in sentiment is backed by recent data. According to Rightmove the proportion of rental properties moving to the sales market is at record levels, with landlord sales now accounting for 1 in 5 homes listed. And this isn’t just a trend; it’s fast becoming the new reality for many investors faced with tightening margins and rising compliance costs.

So, what’s driving this change? And more importantly, should you be reviewing your own buy-to-let strategy?

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What’s changed for landlords in 2025?

It’s not just one thing it’s the cumulative effect of tax, regulation, finance costs, and legislative uncertainty that’s making landlords question the long-term value of their investments.

Interest rates and mortgage affordability

• While interest rates may have peaked earlier in 2025, they remain significantly higher than during the ultra-low rate environment of the 2010s. For many landlords coming off longer term cheap fixed rate deals, monthly mortgage costs have surged.

Tax pressures continue to bite

• Since the removal of full mortgage interest tax relief in 2020, landlords have felt the pinch, especially higher and additional rate taxpayers. With personal tax allowances frozen until at least 2028, and the additional rate threshold cut from £150,000 to £125,140, more landlords are finding themselves pushed into higher tax bands without a corresponding increase in real income.
  In essence, your rental income is now taxed on gross receipts, not net profit, resulting in higher tax bills even as operating costs rise.
  Corporation tax changes have also added a layer of complexity. For landlords operating via limited companies, the main rate of corporation tax is now 25%, and while allowable deductions can still be claimed, dividend tax on extracted profits eats into post-tax returns.

Regulatory burdens and energy efficiency rules

• Although the government scrapped the 2025 EPC C requirement in 2023, the issue has returned to focus. Earlier this year the government opened a consultation on new minimum energy performance standards for rented homes, proposing an ‘equivalent of EPC C’ by 2030.

  For landlords with older properties, the potential retrofit costs could run into the tens of thousands, especially for those with multiple properties in need of substantial upgrades. 

  Another factor for some is the Renters’ Reform Bill which could become law by the end of 2025, bringing major changes for landlords. Key proposals include the abolition of Section 21 ‘no-fault’ evictions, new minimum housing standards, and a national landlord register. If passed, it could make it harder to regain possession of properties and increase compliance requirements. We expect more clarity in the Autumn Budget.

It’s not just landlords. Second homeowners facing further costs

In addition to challenges for landlords, second homeowners are also seeing rising costs. Several local authorities across the UK have introduced or increased council tax premiums on second homes, with some charging up to double the standard rate. There’s also growing pressure on the government to tighten tax rules further in the Autumn Budget, potentially reducing reliefs or increasing CGT on second homes. For those holding property primarily for capital growth, the financial benefit is becoming harder to justify.

What are your options in today’s market?

With all these pressures, you may be wondering whether to continue holding your buy-to-let, restructure your ownership, or exit altogether. Here are a few key options to consider:

1. Hold – but reassess your strategy

If you're on a favourable fixed-rate mortgage and your property still generates strong yields, it might make sense to hold. But don’t assume what worked before still works now, a financial review is critical. Understanding the true after-tax return, accounting for interest costs, and forecasting future maintenance or EPC-related costs is essential.

2. Incorporate – moving your portfolio into a limited company

Incorporating your portfolio may allow you to offset mortgage interest and other expenses more effectively. But the decision isn’t straightforward, higher mortgage rates, stamp duty costs on transfer, and corporation tax can outweigh the benefits. This route can work well in the long-term, but you’ll need careful tax and legal advice before making any changes.

3. Transfer ownership to a lower earning spouse

If your partner is a basic-rate taxpayer, transferring part or full ownership of the property may help reduce the overall tax bill. This must be done properly to avoid triggering tax charges, so working with a solicitor is recommended.

4. Sell and reinvest

If the numbers no longer work or the hassle is no longer worth it, selling may be the right move. Whether you’re unlocking equity to pay off debt, support retirement, or diversify your investments, there are viable alternatives to bricks and mortar.
From diversified investment portfolios to tax-efficient vehicles like ISAs, pensions or bonds, we can help design a solution tailored to your goals, tax situation, and risk appetite. You don’t have to give up on income, just the stress that often comes with being a landlord.

Keep one eye on the market, and the other on the Chancellor

Buy-to-let remains a viable strategy for some but it’s certainly no longer the "easy money" investment it once was. The landscape has changed, and for many landlords, the numbers are becoming harder to justify.

Whether you're an accidental landlord with one property, or a company landlord managing a small portfolio, now is the time to review your strategy, particularly ahead of the Autumn Budget 2025, which could shift the dial once again.

If you’re thinking of selling your buy-to-let property or want to explore other ways to invest more efficiently, we’re here to help. At The Private Office, we work with landlords and investors just like you, people with over £100,000 in investable assets who want clarity, confidence, and control over their finances.

We’re a team of award-winning Financial Planners, and we’d be happy to help you understand your options and make informed decisions for the future.

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The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. 

The value of your investments can go down as well as up, so you could get back less than you invested.

Your buy-to-let property may be repossessed if you do not keep up repayments on your mortgage.

The Financial Conduct Authority does not regulate tax planning and some forms of buy-to-let.