Landlord Losses on Buy-to-Let Sales Jump 32% to £1.15bn

Landlords locked in record losses on property sales last tax year. Realised losses on residential property investments rose 32% to £1.15 billion, up from £870 million the year before, according to Bowmore Wealth Group research using HMRC capital gains tax data. Around 36,000 properties were sold at a loss, an average of about £32,200 each. These figures only capture losses crystallised through actual sales, so paper losses across the wider buy-to-let sector are likely to be much higher.

Several pressures came together. Investors have been hit by stagnating prices nationally and falling prices in key markets such as London, which has eroded the capital growth that historically made modest net yields tolerable. Borrowing costs also rose sharply: Savills’ analysis of HMRC data shows the average tax-paying landlord’s profit fell 11.2% in 2024-25, driven by a 32% rise in finance costs. Finance costs are now the biggest single expense, as landlords claimed £12.82bn in residential finance costs in 2024-25, 37% of all expenses claimed against property income. Bowmore’s David Floyd added that the Renters’ Rights Act may have pushed some investors to sell even at a loss.

A steady flow of discounted investment stock creates opportunities for buyers who can move quickly. That includes auction purchases, refurbishment and value-add projects, HMO or flat conversions, and portfolio acquisitions where speed matters more than price. Motivated sellers also mean more chain-break and below-market-value transactions that need short-term funding.

The same conditions call for caution. Falling values in some markets put more weight on up-to-date valuations, conservative LTVs and realistic resale assumptions. The abolition of section 21 also makes vacant possession harder to secure. Savills notes that the complexity of securing vacant possession is likely to temper any surge in sales, which matters where a loan’s exit depends on selling with vacant possession. Bridging loans that plan to refinance onto buy-to-let mortgages also need rental cover stress-tested against today’s higher rates.