Buy-to-Let Investment Is Showing Signs of Recovery: What the Latest Data Means for Landlords
Over the past few years, the buy-to-let market has faced significant challenges. Rising interest rates, tax changes, increased regulation and the introduction of the Renters’ Rights Act have prompted many landlords to review their investment strategies, with some choosing to reduce or exit their portfolios.
However, recent market data suggests investor confidence is beginning to recover.
While today’s market looks very different from a decade ago, experienced investors are once again purchasing rental properties, encouraged by strong tenant demand, improving market conditions and the long-term fundamentals of residential property investment.
Investor Activity Is Increasing
Research by Hamptons shows that landlords accounted for 13.3% of all residential property purchases across Great Britain between January and April 2026, the highest proportion recorded since 2016.
Importantly, much of this activity has been driven by landlords purchasing properties from other landlords. This indicates that while some investors continue to leave the sector, experienced landlords are taking advantage of opportunities to strengthen and expand their portfolios.
This trend reflects a market that is becoming increasingly professional, with investors who have a long-term strategy continuing to see value in residential property.
Landlords Are Buying More Than They Are Selling
Further evidence of improving confidence came in June 2026, when market analysis reported that landlords purchased more properties than they sold for the first time since 2019.
Landlords accounted for 10.2% of all residential purchases, while only 9.2% of homes listed for sale had previously been rental properties.
Although this represents just one month of data, it is a notable indicator that investor sentiment may be improving after several years of subdued activity.
Professional Investors Continue to Adapt
Today’s buy-to-let investor is also changing.
Many landlords are now purchasing through limited companies, reflecting the impact of tax changes introduced in recent years and the desire to structure investments more efficiently.
According to Hamptons’ analysis of Companies House data, 66,587 new buy-to-let companies were incorporated during 2025, taking the total number of companies established to hold residential investment property to well over 400,000.
Rather than leaving the sector entirely, many investors are adapting their ownership structures to suit the changing legislative and tax environment.
Rental Demand Continues to Outstrip Supply
Perhaps the strongest argument for continued investment is the imbalance between supply and demand.
The latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) shows tenant demand continues to rise while new landlord instructions remain in negative territory, meaning relatively few additional rental properties are entering the market.
As a result, RICS expects rental prices to continue increasing over the coming year if this supply shortage persists.
For landlords, this can support:
- Lower void periods.
- Continued strong tenant demand.
- Stable long-term rental income.
- Opportunities to improve yields where market conditions allow.
Of course, every investment should be assessed on its own merits, taking into account local market conditions, financing costs and long-term objectives.
What Does This Mean for Somerset Landlords?
Across Somerset, we continue to see healthy demand for well-presented rental homes.
Properties that are realistically priced and professionally marketed often attract strong levels of interest, particularly in areas such as Paulton, Midsomer Norton, Radstock, Timsbury, Wells and the surrounding villages.
For existing landlords, the current market provides an opportunity to review portfolio performance, assess rental values and consider whether there are opportunities to expand.
For prospective investors, today’s market reinforces the importance of careful research, realistic yield calculations and ensuring any investment remains fully compliant with current legislation.
A More Professional Rental Market
The private rented sector is undoubtedly evolving.
Higher compliance standards, changing legislation and greater expectations from tenants mean successful landlords increasingly take a professional, long-term approach to managing their investments.
The latest market evidence suggests confidence is beginning to return. Experienced investors are expanding their portfolios, demand for rental homes remains strong, and the supply of available properties continues to fall short of tenant demand.
While buy-to-let is no longer the straightforward investment it may once have been, for landlords who understand the market and plan carefully, residential property continues to offer attractive long-term investment potential.
Thinking About Your Next Investment?
Whether you’re considering purchasing your first investment property or expanding an existing portfolio, obtaining professional advice has never been more important.
At Allen Residential, our experienced lettings team provides landlords across Paulton, Midsomer Norton, Radstock, Timsbury, Wells and the surrounding Somerset villages with honest, evidence-based advice on rental values, tenant demand, expected yields and legislative compliance.
If you are considering your next buy-to-let investment, we would be delighted to help you make an informed decision.
Please feel free to register with us or give us a call to discuss on (01761) 412 300 for the Paulton office and (01749) 672 678 for the Wells Office or email lettings@allen-residential.co.uk
