International Investors Eye UK Property as Buy-to-Let Market Sees Strong Growth

The UK’s buy-to-let sector is gaining momentum again. After a slower period, the start of 2025 has brought a noticeable uptick in investor activity. New figures from UK Finance confirm it: lending for buy-to-let purchases is on the rise.

In the first quarter of the year, lenders advanced 58,347 new buy-to-let loans. That’s a 38.6% increase compared to the same period in 2024. The total value of these loans hit £10.5 billion, up nearly 47% year-on-year. It’s a strong return for a market many had been watching closely.

These numbers indicate that demand for rental properties remains robust and that more investors are being drawn in by attractive yields and an improved economic outlook.

Buy-to-Let Yields and Borrowing Costs Are Moving in Investors’ Favour

Digging deeper, the average gross rental yield rose slightly to 6.94% in Q1 2025, up from 6.88% the year before. It’s a modest shift, but a positive one, particularly at a time when returns in other asset classes remain uncertain. This is a reassuring sign for investors; returns are holding strong, particularly in popular regions where renters are competing for good-quality homes. At the same time, mortgage rates for new buy-to-let loans have dropped. The average now stands at 4.99%, down on both the previous quarter and last year, making it easier for landlords to finance their purchases or expand their portfolios.

The interest cover ratio, a measure of how comfortably landlords can cover their mortgage payments with rental income, has also improved. It has climbed from 190% to 202%, giving landlords more room to maneuver financially.

Overseas and Expat Investors Find New Openings

One of the more significant trends is the return of international buyers. Interest from overseas investors, especially those based in the Middle East, has been rising steadily. There are a few reasons for this. UK property continues to offer stability, strong long-term returns, and consistent demand from renters. Lenders are also offering more competitive products for non-residents, making financing easier to secure.

It’s also easier for non-UK residents to access buy-to-let mortgages now, thanks to more competitive lending options. Lower interest rates and strong yields are opening up access to high-demand rental markets in cities like London, Birmingham, and Manchester, areas where tenant demand remains strong throughout the year.

These shifts are making the UK property market even more appealing for those looking to diversify their investment strategies and hedge against volatility in other regions.

Outlook: Positive Momentum for Domestic and International Investors

For domestic investors, the current picture is just as promising. Lower borrowing costs, resilient rental yields, and improving sentiment are creating the right conditions for growth.

Whether the focus is long-term capital appreciation or steady rental income, the opportunities are there, particularly in key city centres and regional hotspots across the North and Midlands.

As 2025 progresses, there’s growing confidence that lending volumes and investor activity will continue to build. With competition between lenders likely to increase, the market could become even more favourable in the months ahead.

Coupled with ongoing high tenant demand, this will likely fuel further growth in buy-to-let lending and investment activity.

Magnate Assets: Your Strategic Partner in UK Property Investment

At Magnate Assets, we help clients navigate the UK’s property market with confidence. Whether you're based in the UK or investing from abroad, our team provides support across the full buy-to-let process, from sourcing and financing to managing and growing your portfolio.

If you’re looking to capitalise on the renewed growth in the UK buy-to-let market, now is the time to explore your options. The combination of falling rates, attractive yields, and a resilient rental market presents a compelling case for both portfolio expansion and first-time entry.

Get in touch with Magnate Assets today to discuss your investment objectives and discover how you can secure long-term, profitable returns in the UK property market. Let us help you unlock the full potential of your buy-to-let strategy in 2025 and beyond.