Buy to let investment grows as tenant demand increases across London

Despite ongoing government regulation, landlords continue to invest in London’s buy to let market, according to new research.

Chestertons reports that the BTL market is showing signs of recovery, with UK Finance data revealing that 16,026 properties were purchased using buy to let mortgages across the UK in the second quarter of 2026, representing a 23% increase on the same period in 2025.

The estate agent also reports improving confidence across London’s wider property market, with buyer enquiries and registrations increasing year-on-year in October for the first time in more than a year, alongside a rise in new tenant registrations.

Opportunities for investors

Despite the Budget announcement that tax rates on property and savings income will increase by a further two percentage points from April 2027, Chestertons suggests that the differing tax treatment of limited companies could encourage more landlords to hold their investment properties through corporate structures.

Katinka Hill, head of lettings at Chestertons, said: “Despite the additional tax pressures facing individual landlords, we’re seeing opportunities for investors purchasing through limited companies, particularly those looking to build or expand their rental portfolios.

“Renewed buy to let investment would be welcome news for London’s rental market, helping to maintain the supply of homes available to tenants while offering investors the potential for longer-term returns.”

The estate agent also reports strong tenant demand and rental growth in London.

According to Rightmove’s Rental Trends Tracker, average monthly asking rents in the capital rose by 3.2% year-on-year to £2,825 in the third quarter of 2026, compared with annual growth of 2.4% across the rest of Britain.

Encouraging news for landlords

Chestertons recorded a 4.1% year-on-year increase in new tenant registrations in October, exceeding the 3.6% average growth recorded so far this year. Enquiries through property portals remained broadly stable, edging up by 0.2%.

The proportion of portal enquiries converting into tenant registrations reached 0.63, its highest level in seven months and above the 0.61 recorded a year earlier. This suggests a greater proportion of prospective tenants are actively progressing their property searches.

Ms Hill added: “For buy to let landlords, this is encouraging news. Rising rents and improving yields are creating opportunities for investors, although choosing the right property and setting a realistic asking rent remain essential to securing reliable tenants and minimising void periods.”

Encouraging signs of renewed buyer confidence

In London’s residential sales market, Chestertons’ October sales figures also point to improving confidence, with property portal enquiries up 2.8% year-on-year and new buyer registrations up 6%.

This marks the first time in over a year that both measures have recorded annual growth, suggesting that more prospective buyers are returning to the market following an extended period of uncertainty.

Adam Jennings, head of residential at Chestertons, said: “Despite uncertainty ahead of the Budget, we saw encouraging signs of renewed buyer confidence in October, with both enquiries and registrations increasing year-on-year for the first time in over a year.

“Since the summer, we’ve also seen more sellers who had previously put their plans on hold deciding to move forward, bringing additional properties to the market.

“Although buyers remain price-conscious, the increase in activity on both sides of the market is encouraging. With much of the uncertainty surrounding the Budget now behind us, we expect confidence to continue improving in the months ahead.”