BTL lending leaps–where are the hotspots?

The number of new buy-to-let (BTL) loans advanced in the UK during Q3 2025 leapt by 22.7% year-on-year, new figures¹ show. Which locations are driving this resurgence? Hint: it’s not London.

With the changes brought about by the Renters’ Rights Bill due to come into force from May, the data suggest a surprisingly bright picture for landlords.

The total value of BTL loans in the third quarter was £10.9bn, up by 28.2% compared with Q3 in 2024. This means that there were 1.44 million BTL fixed-rate mortgages outstanding in Q3 2025, a rise of 2.3% on the previous year.

Also on the up, the average gross BTL rental yield for the UK in Q3 was 7.15%, ahead of 6.93% in the same quarter in the previous year.

These averages mask strong regional differences, with analysts suggesting that the UK’s buy-to-let market is moving northwards. Manchester, Leeds, Birmingham and Sheffield are all gaining a reputation as BTL hotspots, thanks to large populations of students and young professionals.

In fact, Wales has the best rental yields in the country at 8.83%, separate research² found, with the North East close behind at 8.2%. With affordability tightening in London, it seems that lower-cost properties outside the capital now represent better value for many investors.

Rental yields can fluctuate and are not guaranteed. Property values may fall as well as rise.

¹UK Finance 2026, ²Paragon Bank 2026

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.