UK house prices crept up 0.6% in July, lifting the annual growth rate to 2.4%, according to Nationwide. But while the modest uptick signals a degree of resilience, landlords are facing a more nuanced reality, as falling buyer demand, shifting affordability, and policy inertia continue to cloud the outlook.
Prices up, but not everywhere
The average UK house price now sits at £272,664, a rise of just over £1,000 from June. It’s a modest gain, but one that has sparked some optimism. Robert Gardner, chief economist at Nationwide, said: “While the price of a typical UK home is now around 5.75 times average income—the lowest ratio in over a decade—affordability has been improving gradually, helped by earnings growth and lower mortgage rates.”
That said, landlords aren’t popping corks. “Yes, there’s a headline price rise,” said Jonathan Hopper, CEO of Garrington Property Finders. “But in many areas prices are flat or falling. The summer influx of listings—especially from landlords exiting the sector—means buyers have the upper hand. Sellers who price too high will be left behind.”
Indeed, the so-called “modest recovery” masks a market split by region, price point, and buyer intent. Investors and homebuyers alike are navigating a property landscape shaped by rising build costs, tighter planning rules, and a rental sector exodus triggered by anti-landlord policy and high capital gains exposure.
Mortgage approvals hold steady
Mortgage approvals reached 64,200 in June—around the pre-Covid average—suggesting underlying buyer interest remains intact. But Daniel Austin, CEO at ASK Partners, warns not to overstate the bounce: “Growth remains subdued as high borrowing costs continue to weigh on buyers. While interest rates have stabilised, fixed mortgage rates remain elevated, delaying meaningful relief.”
Propertymark CEO Nathan Emerson added: “Even talk of easing interest rates must result in more affordable mortgage products. Many are stretching to 35- or 40-year terms just to make monthly costs work.”
For landlords, that means buyers are picky, cautious, and highly sensitive to borrowing costs—a trend that could cap capital appreciation prospects for the rest of 2025. While a typical five-year fix is now around 4.3% (down from 5.7% late last year), the market hasn’t yet absorbed a meaningful drop in real terms.
Rental stock squeezed as investors quietly exit
Beneath the sales data lies a more troubling picture for the rental sector. “The market’s annual performance remains solid,” said Marc von Grundherr, director at Benham and Reeves, “but much of that is driven by buyers returning post-pandemic. Many landlords are still offloading stock due to tax pressures, EPC uncertainty, and weak legislative support.”
Hopper concurs: “Thousands of homes are being sold off by disenchanted buy-to-let investors.” The effect? Fewer available rental homes, higher rents, and starker regional disparities.
In London and parts of the South East, letting agents report rising demand and falling supply. One Midlands-based landlord told us, “I sold one flat last month and have another two going—tax hits and constant legal changes have made the whole thing unworkable. But I’m not sure who’s buying—certainly not first-time buyers at 4.5% interest.”
Landlords face a buyers’ market
As always, the annual growth figure smooths over sharp regional variations and investor sentiment that’s increasingly hard to pin down. What’s clear is this: buyers are back—but they’re calling the shots.
Verona Frankish, CEO of Yopa, summed up the mood: “Improvements in lending criteria and the Mortgage Guarantee Scheme should help keep the market ticking over, but sellers must stay realistic. There’s a gap between price expectations and actual buyer behaviour.”
For landlords weighing expansion or divestment, now’s the time for due diligence, not speculation. As Foxtons CEO Guy Gittins noted, “Ongoing reforms to lending are welcome, but without broader policy—especially a rework of stamp duty—activity may remain lopsided.”
With the Bank of England set to review rates again next week, landlords will be watching closely. But even if borrowing costs nudge down, questions remain. Will the government finally support landlords facing rising compliance costs? Or will the buy-to-let sector be left to wither in silence?
One thing’s for sure—this isn’t a seller’s market, and landlords know it.
Nationwide’s latest House Price Index was released today.
