UK buy-to-let statistics 2024

What is the buy-to-let market size, and how many buy-to-let properties are in the UK?

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By

Emily Herring

&

Sophie Barber

Updated

Fact checked

If you’re looking to invest in property with the view of renting it out, a buy-to-let mortgage is a great way of borrowing the necessary funds to do so. We looked at the latest reports to see how many Brits are investing in property using this lending method.

Buy-to-let statistics: Highlights

  • £30.5 billion in buy-to-let mortgages was borrowed between July 2022 and June 2023.
  • The average buy-to-let mortgage rate in September 2023 was 5.94% for a 2-year fix, up 4.74 percentage points from 1.2% in September 2021.
  • As of August 2023, the average yearly return on a buy-to-let property was £1,817, down from £6,046 in August 2022, a decrease of 70%.
  • A buy-to-let property owner is predicted to earn over £4000 less a year if a 2-year buy-to-let loan was fixed in August 2023 compared to August 2022.
  • The value of buy-to-let lending dropped by 56% in the six months between December 2022 and June 2023.
  • In 2022, around 4.61 million people were living in buy-to-let properties.
  • The share of mortgage lending for buy-to-let properties was just 8.1% in Q2 2023, the lowest share recorded since the end of 2010.
  • In the first half of 2023, 850 buy-to-let properties were repossessed.

What is the buy-to-let market size in the UK?

From July 2022 to June 2023, there was an estimated £30.5 billion worth of buy-to-let mortgage lending, down 20% from £37.9 billion between July 2021 and June 2022.

In the six months between December 2022 and June 2023, the value of buy-to-let mortgage lending dropped by 56% to £4.2 billion from £9.7 billion.

The share of total mortgage lending value for buy-to-let purposes was just 8.1% in Q2 2023, the lowest observed since the end of 2010 according to the FCA, which may suggest declining interest in landlords wishing to purchase properties to rent.

On the other hand, the highest value of buy-to-let lending granted was in the third quarter of 2022 at £10.7 billion, accounting for 12.5% of the total mortgage lending value.

Month Value of lending
Q2 2021 £10.15 billion
Q3 2021 £8.73 billion
Q4 2021 £8.28 billion
Q1 2022 £10.3 billion
Q2 2022 £10.6 billion
Q3 2022 £10.74 billion
Q4 2022 £9.71 billion
Q1 2023 £5.76 billion
Q2 2023 £4.24 billion

What is the average buy-to-let mortgage rate?

The average buy-to-let mortgage rate in December 2023 was 5.38%, assuming a 2-year fixed-rate mortgage at 75% LTV (loan-to-value ratio). This is down slightly from the decade-high rate of 6.22% observed in July 2023 but is still a significant increase from the average rate of 1.7% seen in December 2021.

The lowest average buy-to-let interest rate in the past decade was seen in October 2021 at just 1.65%.

Month Interest rate
Jul 2021 1.86
Aug 2021 1.79
Sep 2021 1.75
Oct 2021 1.65
Nov 2021 1.67
Dec 2021 1.7
Jan 2022 1.7
Feb 2022 1.78
Mar 2022 2.12
Apr 2022 2.43
May 2022 2.64
Jun 2022 2.85
Jul 2022 3.37
Aug 2022 3.52
Sep 2022 4.12
Oct 2022 5.87
Nov 2022 6
Dec 2022 5.68
Jan 2023 5.34
Feb 2023 5.11
Mar 2023 5.05
Apr 2023 4.76
May 2023 4.78
Jun 2023 5.48
Jul 2023 6.23
Aug 2023 6.1
Sep 2023 5.95

What is the average return on a buy-to-let property?

As of August 2023, the average yearly return on a buy-to-let property is £1,817, down from £6,046 in August 2022. This refers to the amount remaining once mortgage interest payments have been deducted from rental income.

This decrease is due to rising mortgage rates in recent months. When buy-to-let mortgage rates increase, anyone looking to take out a new loan will have much higher monthly interest payments. This puts pressure on rental prices, which are already rising. We compared how buy-to-let returns have changed over time in line with changing house prices, mortgage rates and rent prices.

In August 2023, landlords would have paid approximately £1,110 in buy-to-let mortgage interest. An average monthly rental price of £1,261 leaves them with returns of £151, adding up to £1,817 over the year.

This is a substantial decrease in returns from August 2022, when just £639 in interest was paid, and there was an average rental price of £1,143, giving returns of £504. This adds up to £6,046 over the year.

These estimates show the owner of the average buy-to-let property could earn £4,229 less a year if a 2-year loan was fixed in August 2023 compared to August 2022. This is why there are fears about landlords selling their buy-to-let properties and leaving the rental market as they don’t want to sign up to a new mortgage rate.

Period Interest rate Average monthly returns
August 2018 2.24% £622.34
August 2019 2.13% £659.33
August 2020 1.88% £704.18
August 2021 1.79% £761.64
August 2022 3.52% £503.81
August 2023 6.10% £151.39

How many buy-to-let properties are there in the UK?

In 2022, around 4.61 million people were living in buy-to-let properties. The total number of buy-to-let properties is likely higher, as some rental properties would have been unoccupied.

However, reports suggest more landlords are selling their rental properties, with estimates that 400,000 properties have been sold between 2016 and May 2023 and 126,500 properties have been sold since the beginning of 2022. The same estimates suggest that 1 in 10 rental properties could be lost from the market by the end of 2023.

Rises in the base rate this year have meant that mortgage rates are soaring in the buy-to-let market as well as the residential market, and this makes it less appealing for landlords to invest in property.

What is the average buy-to-let deposit?

A typical deposit for a buy-to-let property is usually 25% of the property price, but this can vary between 20% and 40%. The minimum deposit will usually be higher than a standard residential mortgage deposit.

Buy-to-let mortgages in arrears

There were 8,980 buy-to-let mortgages in arrears of 2.5% or more in the second quarter of 2023, 28% more than in the previous quarter. Within the total, there were 4,810 buy-to-let mortgages in the lightest arrears band, representing between 2.5% and 5% of the outstanding balance.

The highest amount of arrears owed in the past three years was in April-June 2023, as buy-to-let mortgages in arrears made up 0.44% of all outstanding buy-to-let mortgages.

How many buy-to-let properties are repossessed?

In the second quarter of 2023, 440 buy-to-let mortgaged properties were taken into possession, a 7% increase on the previous quarter. In 2022, a total of 1,450 buy-to-let properties were repossessed.

The first quarter of 2020 had the highest number of possessions over the past three years, as 640 properties were possessed. However, this decreased by 80% by the second quarter of 2020, as only 130 buy-to-let properties were possessed.

Month Buy-to-let
2020 Q1 640
2020 Q2 130
2020 Q3 220
2020 Q4 190
2021 Q1 180
2021 Q2 230
2021 Q3 310
2021 Q4 320
2022 Q1 380
2022 Q2 350
2022 Q3 400
2022 Q4 320
2023 Q1 410
2023 Q2 440

Who is the biggest buy-to-let mortgage provider in the UK?

Nationwide is the biggest UK buy-to-let provider in terms of gross lending, with a market share of 15.8% and total lending of £7.43 billion in 2021. Lloyds Bank comes in second place, with a 14.3% market share, followed by Santander (9%), Coventry Building Society (7%) and OneSavings Bank (6%).

Bank Market share
Nationwide Building Society 15.80%
Lloyds Banking Group 14.30%
Santander UK 9.00%
Coventry Building Society 7.00%
OneSavings Bank Plc 6.10%
Barclays 5.00%
NatWest Group 4.60%
Virgin Money Plc 4.50%
Paragon Banking Group 3.60%
Foundation Home Loans 2.50%

What is the average buy-to-let rental yield?

Rental yield is the potential returns a landlord could get on a property they purchase and then rent out. The average rental yield varies across property types.

Multi-block flats had the best rental yield in the third quarter of 2022 at 6.3%. They are followed by houses in multiple occupations (HMOs) and bungalows. Houses and individual flats are estimated to be less profitable property types in the buy-to-let market, but there isn’t a massive difference between the property types.

Property type Q3 2022
Multi-block flats 6.30%
Houses in multiple occupation (HMO) 6.20%
Bungalow 6.10%
Detached house 5.90%
Terraced house 5.90%
Individual flats 5.80%
Semi-detached house 5.70%

Sources

  • UK Finance
  • FCA
  • ONS
  • Bank of England
  • Paragon Banking Group
  • CBRE

Methodology

    To calculate buy to let returns, Finder took the average monthly house prices according to the ONS house price index and interest rates on a 2-year fixed rate 75% LTV buy-to-let mortgage according to the Bank of England. The mortgage interest rates were then calculated using the Money Helper mortgage calculator. The average UK rent prices were taken from Homelet, and the average interest paid on a mortgage was then subtracted from the average rent to get the returns.

Click here for more research. For all media enquiries, please contact:

Matt Mckenna
UK communications manager
T: +44 20 8191 8806
matt.mckenna@finder.com@MichHutchison/in/matthewmckenna2

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