Recent figures released by UK Finance show a strengthening appetite for buy-to-let investment, with buy-to-let financing rising 39% in volume and 47% in value in the last quarter of 2024, compared to the same quarter the previous year.
This continued interest in pursuing buy-to-let investment may be surprising to some, as financial markets continue to face real economic uncertainty, exacerbated by recent updates, including changes to stamp duty thresholds and the impending Renters’ Rights Bill. However, the UK property market continues to appeal to customers, especially those who reside overseas, looking to purchase investment properties.
London remains the fastest growing location in the UK for buy-to-let properties, having seen a 13% uplift in buy-to-let landlords between 2023 and 2024, with the capital also boasting the largest group of landlords owning multiple properties. Other cities performing well within the sector include Birmingham, Bristol, Manchester, Leeds and Edinburgh, with houses in multiple occupation (HMOs) proving particularly popular in areas where there is a large population of students and young professionals.
The UK housing market remains an attractive option
One of the most compelling reasons why investors remain interested in the UK’s buy-to-let market is due to its potential to yield consistently strong returns. Research released by Fleet Mortgages in April 2025 found that rental yields across England and Wales remained positive, with only one region showing a slight year-on-year drop. The total average yield across England and Wales reached 7.4% in the first quarter of this year, up 0.3% on the same quarter last year. And, while the market is undergoing a stabilisation following larger increases in yields seen during 2024, a strong demand paired with a low supply of suitable properties means landlords will continue to see strong returns.
For overseas investors and in addition to the potential for high yields, the UK market continues to retain its reputation as a historically stable one, with strong laws and policies in place. One such draw in English property law being that international investors are able to deduct tax from some expenses such as property management fees, maintenance and insurance which help to make the UK an attractive prospect.
Many providers are also tailoring their product proposition to make it more attractive for UK expat and International investors. At Gatehouse Bank, we are always looking to enhance our proposition and broaden the availability of our offering to help our customers achieve their goals. Our expertise within the international market really strengthens our ability to cater to a more diverse range of landlords from a wide range of localities.
The rise of Shariah-compliant property finance
At Gatehouse Bank, we have witnessed the fast-paced growth experienced by the Islamic finance sector first-hand, as consumers increasingly seek more ethical and sustainable banking options which align more closely with their values. Our research illustrates this growing appetite for ethical options in relation to home finance specifically, with a recent survey revealing that almost half (45%) of UK homebuyers would consider using an ethical finance provider that follows Islamic principles. Further data from Gatehouse Bank’s Islamic and Ethical Finance Report 2024 showed that just under two fifths (37%) of UK homebuyers would be most attracted to Shariah-compliant providers because they do not invest in unethical sectors, such as alcohol, tobacco, adult entertainment, gambling and the arms industry.
For those who may be unfamiliar with the main differences between Islamic and conventional finance, Shariah-compliant providers offer purchase plans, which are sometimes known as Shariah-compliant mortgage alternatives. At Gatehouse Bank, we offer a range of buy-to-let purchase plans for UK residents, UK expats and international landlords who are seeking finance to purchase or refinance a property. These products involve the customer and the Bank forming a partnership to jointly purchase the property, with the customer then paying monthly acquisition payments and rent on the share of the property they do not yet own. Once all payments have been made, full ownership of the property is transferred to the customer.
While there remains a degree of uncertainty over the trajectory of the UK property market due to recent changes and challenging economic conditions globally, there are reasons for an optimistic outlook when it comes to buy-to-let property investment. As Savills’ latest property market forecasts show, UK rental growth is predicted to surpass 17% over the next five years despite these challenges, offering a wealth of opportunities for those investors able to navigate the changes effectively.
