Corporate insolvencies in England and Wales were broadly stable in July relative to both June 2025 and the same period last year. Whilst elevated by historic standards, insolvency levels are lower than the 30-year annual high seen in 2023.
The economic backdrop remains unsettled, with general caution in the corporate marketplace, as firms delay significant investment decisions until the wider direction of economic travel becomes clearer. A deceleration in growth witnessed between Q1 and Q2 reflects various factors, including global trade turbulence and the impact of higher labour costs. A cut to interest rates in August, whilst marginal (down from 4.25% to 4%), will provide a degree of support to industry against wider cost rises. In isolation, it is unlikely to have a material impact on UK economic performance over the medium-term, however.
Corporate challenges are further evidenced by recent data released by NARA, The Association of Property and Fixed Charge Receivers. Their data shows increasing levels of fixed charge receivership appointments have been made over assets held by corporate borrowers over the past 4 years. Increasing appointment levels have also been witnessed on a short-term basis, with an increase in the volume of appointments of 74% in Q1 & Q2 2025 against Q3 & Q4 2024. Comparisons with Q1 & Q2 2024 show a similar 67% increase.
Whilst the appointment data does have its limitations (it is based upon individual charges against UK corporate entities, which could encompass a single or multiple properties), the overarching trends are clear.
NARA’s data further shows that the residential sector has been by far and away the most common property type appointed over during the course of 2025, representing c. 65% of appointments.
Watling are engaged on numerous residential appointments, including buy-to-let (BTL) investments, part-completed development sites, multi-let blocks and portfolios, acting on behalf of private clients, lenders and insolvency practitioners. There are various challenges facing the sector at present, particularly the private rental and BTL market. We have outlined some of these below:
- Renters’ Rights Bill: Set to become law during 2026, this represents one of the biggest changes to the sector in a generation. Key provisions of the Bill include abolition of Section 21 “no-fault” evictions and reforms to possession grounds, restrictions on rental increases, a shift from fixed-term to periodic tenancies and increased enforcement powers for local authorities. The changes reflect an increasingly ‘tenant-friendly’ landscape within the sector.
- Taxation: Stamp Duty surcharges on second homes increased in both 2016 and 2025, now standing at a 5% premium on additional property purchases. Moreover, it is understood Labour are considering making rental income subject to National Insurance and removing Capital Gains Tax relief for higher-value properties. Such changes impact both entry and exit costs to the sector.
- Loss of mortgage interest relief: Mortgage interest relief has been tapering since 2020. Landlords can no longer offset full mortgage interest; instead they receive only a 20% tax credit, increasing taxable rental income and reducing returns.
- Regulation & compliance: Increasing demands have been placed on buy-to-let landlords, with incrementally increasing obligations over a sustained period of time around health & safety, right to rent, energy efficiency, record keeping, property licencing and planning obligations. As a result, the buy-to-let market is no longer a passive investment, encouraging investment by only professional and well-informed landlords.
Whilst making the residential sector more challenging to navigate, not all impacts have been negative, with the following pertinent themes arising:
- Tenant demand: The higher interest rate environment and demographic trends will likely lead to an increasing proportion of potential first-time buyers remaining in the rental market for longer, underpinning medium to long-term demand for private rental properties.
- Constrained supply: RICS Residential Market Surveys have reported a general decline in Landlord instructions since 2020. With reduced supply and rising tenant demand over the same period, rental growth remains in positive territory for those landlords remaining in the market. Following significant rental increases in 2022 and 2023, ONS data confirms a 7% increase in UK private rents in the 12 months to May 2025.
- Professional landlords adapt: Many landlords are scaling up or holding assets via limited companies to mitigate tax and interest pressures. The number of companies holding buy-to-let property across the UK is up more than fourfold to over 400,000 compared to February 2016, when full mortgage interest tax relief began to be withdrawn from homes owned by higher-rate taxpayers.
- Regional shift: London landlords are increasingly buying outside the capital driven by affordability and attractive yields in lower value locations.
- Build-to-Rent (BtR) gains traction: Professionally managed rental developments continue to make up an increasing percentage of the private rented sector, backed by institutional investment. In 2024, build-to-rent made up nearly 10% of new-build completions cross England and Wales. This figure is expected to increase as the market matures.
The above represents only a snapshot of some of the challenges and pertinent themes within the sector. Watling are highly active within the market and continue to keep abreast of prevailing market dynamics and trends.
Should you require assistance or advice in respect of your residential portfolio, please do not hesitate to reach out to one of the Watling team.
Watling will be taking a further deep dive into the sector during our next Watlingi publication. Sign up here if you do not already receive our quarterly publication.
