UK 2025: Property Bonds vs. Buy-to-Let

From our in-house experts

For many investors, the traditional route of buying to let (BTL) has long been the default property investment strategy. However, with rising costs, increasing regulation and market volatility, the BTL model is not offering the same level of attractively passive returns as in previous years. In 2025, an increasing number of investors are asking whether property bonds may offer a smarter, more streamlined alternative. Here’s what the latest UK data and regulatory environment show.

The hidden costs of Buy-to-Let in 2025:

• Deposit, financing & upfront fees

• A typical deposit sits at 15-25%, which on a £300,000 property would be £45,000-£75,000.

• Mortgage arrangement and booking fees commonly range from £500-£2,500 (plus solicitor/conveyancing/searches) and surveys/valuations cost in the region of £300-£1,500.

• These are costs that must be met ahead of letting and before rental income is secured.

  
  

Operational annual costs:

• Letting agent fees (5-20% of gross rental income) can erode net returns.

• Maintenance, insurance, compliance checks (EPC, gas safety, licences) can easily total £8,000+ a year, depending on size and location.

• EPC upgrade obligations (to meet new compliance deadlines) are significant: many properties require £6,100-£8,000 of upgrades to meet enhanced standards.

  
  

Stamp Duty Land Tax (SDLT) for BTL/additional properties:

• From 1 April 2025, the higher SDLT rates for additional residential properties apply as follows: 5% on the first £125k, 7% on the portion £125k-£250k, 10% on £250k-£925k, 15% on £925k-£1.5 m, and 17% on anything above. (Source)

• In effect, what might have been a modest tax on a second home is now significantly higher, which increases the upfront barrier for BTL. For example, on a £300k purchase, the tax alone jumps meaningfully compared to previous thresholds.

Regulatory burden:

• The Renters’ Rights Act 2025 (formerly the Bill) has received Royal Assent. It abolishes “no-fault” evictions under Section 21, requires landlords to use legitimate grounds for possession, limits rent increases to once per year, restricts multiple months’ rent in advance and bans rental bidding wars. (Source)

• Such changes increase landlord compliance obligations, add administrative burden and reduce flexibility, which in turn adds friction for the BTL model.

  
  

Yield pressure:

• In terms of rental yields, recent data from September 2025 shows that the average for the UK for buy-to-let is: North East ~7.9%, Scotland ~7.6%, North West ~6.8%. In London, the figure drops to ~5.1%. (Source)

• However, those figures are gross yields and do not account for the upfront tax, compliance costs, void periods, mortgage servicing or regulatory costs. It is realistic for net yields to be materially lower, particularly after all costs.

Property Bonds – a smarter, hands-off investing alternative?

Hands-off investing:

With property bonds, investors typically commit capital to a fund or special-purpose vehicle rather than directly owning a property themselves. The investor avoids mortgage negotiations, property conveyancing, tenant management, compliance duties or physical maintenance.

Fixed rates and returns:

Many property bond programmes offer defined investment terms and transparent return structures. While each opportunity must be reviewed individually, these investments typically provide clarity from the outset, with agreed timelines and income structures set out in advance.

(Note: Always review offering documents and ensure suitability before investing.)

Passive, predictable returns:

Because the property bonds spread risk across underlying assets, manage the compliance and operational work on behalf of the investor, and often embed a target return, the investor experience can be far more passive and predictable when compared with a full BTL ownership route.

Zero operational or compliance costs for investors:

From the investor’s perspective, once the investment is made, they are not responsible for EPC compliance, letting agents, tenant issues or property upkeep.

Comparison at a glance:

Feature	Buy-to-Let	Property Bond Investment
Up-front & ongoing costs	High deposit, SDLT, legal, EPC, compliance, agent fees	Initial investment only; no direct property management costs
Investor experience	Hands-on or delegated, significant admin burden	Fully hands-off, managed by professionals
Return profile	Yield variable, dependent on property, tenant, cost	Targeted returns, structured, transparent

Are property bonds a perfect solution?

Not necessarily. While property bonds remove a lot of the direct headaches of BTL, they carry their own risks: asset manager risk, underlying property market risk, liquidity restrictions (many will lock in for a fixed term), and you must be comfortable with the structure and the operator. As with any investment, due diligence is crucial.

The 2025 takeaway

For those investing in UK property in 2025, the buy-to-let model is under increasing pressure. Larger upfront tax burdens, higher regulatory costs, administrative demands and lower net yields are making the strategy less straightforward. In contrast, property bond structures offer an alternative path: less operational burden, more predictable returns and a more streamlined investor experience.

If you would rather invest without the landlord headaches, juggling EPCs, managing tenancies and navigating regulatory risk, then a property bond may be a compelling alternative, particularly if you’re seeking a more hands-off route into property markets.

Next Step

If you’d like to explore this further, we’d be pleased to arrange a short, no-obligation call with one of our property bond specialists. We’ll walk through how our investments work, how returns are generated, and whether this approach aligns with your broader portfolio goals.

* Return targets are subject to the operator, asset strategy and risk profile. Past performance is not a guarantee of future results.