While 2025 has offered falling mortgage rates, resilient house prices and rising yields, 2026 could see more investors pushing ahead with deals as the outlook for property investment improves.
The UK housing market has experienced a revival since the start of the year as the Bank of England made the long-awaited decision to begin cutting interest rates, while falling inflation has also boosted buyer confidence.
Since this time last year, according to the latest figures from HM Land Registry, the average property price – measured as sold prices to the month of August when the latest data runs to – has risen by 2.6%. Although this is a slower annual price change compared with the previous year, prices overall have performed more strongly in 2025.
As the year comes to a close, the market still has a major hurdle yet to face, with Chancellor Rachel Reeves set to deliver her Autumn Budget this week on 26 November. Speculation on what the Budget may contain has been rife, and analysts have noted a stalling effect on the property market as a result. Rumours that major stamp duty changes could be made has led to many opting a ‘wait-and-see’ approach until things become clearer.
While the market tends to slow its pace on a seasonal level, the question of whether property investment will be a good idea in 2026 is already pertinent, particularly as falling interest rates have affected savings rates. Further to this, another Budget rumour involves a potential cut to the cash ISA allowance, which may see some considering whether property investment is a better avenue for their wealth.
Easing financial conditions
Rachel Geddes, Strategic Lender Relationship Director at Mortgage Advice Bureau, spoke with BuyAssociation about what 2026 could hold from a property investment perspective, along with what trends or areas might be significant in the year ahead.
“2026 is expected to deliver a marginal uplift in purchase activity due to easing financial conditions,” she noted. “However, buy-to-let profitability remains constrained by existing taxation and key regulatory changes, notably the Renters’ Rights Act. This environment will accelerate market professionalisation: some landlords may exit, while others may look to expand their portfolios.”
While the Renters’ Rights Act 2025 received Royal Ascent at the end of October, none of the provisions of the Act have yet come into force, but the government has published an implementation roadmap setting out a potential timetable for the regulations to come into play.
So far, 1 May 2026 appears to be the first date when changes will be seen, including the end of the “no-fault” eviction, new rolling tenancies to replace fixed contracts, and the removal of discrimination. As with any new regulation, as more details become clear, landlords are likely to regain confidence and adapt to the new conditions, but in the interim the uncertainty can affect the sector.
House price and buy-to-let outlook
According to Savills, house prices look set to grow by 2% over the course of 2026, compared with the 1% growth they are on track to achieve by the end of the year according to the estate agency’s measure. While this is lower than its earlier prediction, it indicates an ongoing resilience in the housing market, as well as presenting an opportunity for property investors looking to capitalise on the slower growth before stronger predicted gains in 2028 (5%) and 2029 (5.5%).
While financial events like the upcoming Budget do play a part and can “weigh on the market”, the impact is likely to be more keenly felt in the prime property market – meaning demand and market activity should be less affected in the wake of any announcements.
The North of England has been outperforming the South consistently in recent years when it comes to property price growth, leading to a sharp rise in investor interest away from the capital, and experts predict this is set to continue.
From a buy-to-let perspective, rental yields in the North have also continued to surpass those in the South, offering the potential for greater profitability for landlords.
Rachel Geddes told BuyAssociation: “For pure rental yield, the North of the UK remains dominant. The North East and parts of Scotland continue to record the highest gross yields due to low entry prices and strong tenant demand.”
The mortgage market also plays an important role on both of these factors, as investors are able to secure properties at lower prices and therefore with less leverage in the North. This can also enhance profits, particularly when interest rates are higher, and offers more of a cushion against sticky ongoing rates.
In recent weeks, mortgage rates have recorded a steady fall, particularly for borrowers with smaller deposits, which has been a catalyst for market activity. Product availability has also increased over the course of the year on residential and buy-to-let mortgages, offering greater scope for borrowers to secure a competitive product.
What about future property investment trends?
While location and a focus on the North of England have been a key trend for property investors trying to broaden and stabilise their portfolios and maximise their assets in the current climate, limited company purchase has also continued to accelerate among buy-to-let landlords.
Rachel Geddes noted: “The shift to limited company structures for new buy-to-let purchases is now the norm, accelerated by regulation. This trend of professionalisation and market consolidation will continue, favouring experienced portfolio investors.”
A Landlord Trends survey earlier this year from Foundation Home Loans revealed that 20% of responding landlords now have at least one buy-to-let mortgage in a limited company, rising to 30% for portfolio landlords. Looking at future plans, 63% of landlords planning to increase their portfolios said they would use a limited company to buy their next property or properties, compared with just 29% who said they would buy in their own name.
The main benefits cited included increased profitability through reduced tax liability, limited liability protection through the structure, and other potential tax benefits. It also shows a forward-looking ideology among landlords and property investors looking to continue to invest in UK property in the most efficient way.
According to Rachel Geddes, lenders are adapting to other trends being seen in the market, including the growing popularity of houses in multiple occupation (HMOs) among investors and tenants alike.
“There is continued high demand for flexible, high-yield accommodation, resulting in the rising appeal of HMOs and other co-living options, as tenants seek to manage affordability,” she explained.
“Lenders are actively responding to buy-to-let demand with more competitive rates and increased product choice for limited company mortgages (now often below 5%), and are also introducing more specialist products (e.g., higher LTI multiples for first time buyers). These product innovations are expected to continue as rates ease.”
