The buy-to-let sector continues to show its resilience as landlords restructure and refinance, with predictions for a 25% cumulative rise in lending by the end of 2026.
Buy-to-let mortgage lending is predicted to have ramped up by 14% by the end of this year according to research from the Intermediary Mortgage Lenders Association (IMLA), with a further 11% boost in lending expected over the course of 2026.
This would bring total buy-to-let lending up to £42bn, and comes as a result of better affordability for landlords thanks to falling interest rates combined with the continued rise in rental prices.
With rental supply still falling short of tenant demand in many parts of the UK, landlords are seeing huge levels of demand for their properties, with the added effect of improving rental yields as property prices have been rising at a slower pace than rents.
Top strategies for buy-to-let landlords
Successful landlords and property investors continually adapt to the changing market, using various strategies to navigate things like tax changes, new regulations, and fluctuating interest rates, along with changing trends among tenants.
One major shift in the market over recent years has been the exponential growth in buy-to-let landlords setting up limited companies to build and manage their portfolios.
According to the latest research by Coventry for Intermediaries, almost three quarters (72%) of landlords who currently operate through a limited company entered the market in the past five years. A third (30%) of limited company landlords were first-time investors.
Why invest in property?
Property investment is a strategic move aimed at generating a regular income through rental returns, alongside potential capital gains through value rises over time. A common strategy for building a portfolio is to use this added value to invest in more properties and increase rental returns.
According to Coventry for Intermediaries’ survey, a huge 47% of landlords were motivated to invest because of the prospect of generating a regular income. A further 42% said their main motivation was building assets, while the same number said they invested in property to generate retirement wealth.
These motivations show that property investment is widely viewed as a way of achieving long-term financial goals. This is another reason why many landlords are turning to a limited company, as it can enable them to run their portfolio more efficiently.
The main reasons cited by buy-to-let landlords for setting up a limited company were optimising tax efficiency on rental income; building a professional property portfolio; and separating personal and business finances.
What’s on the horizon?
While the outlook for buy-to-let mortgage lending is certainly positive according to IMLA, some landlords are concerned about upcoming hurdles for the sector. Again, agility and adaptability are the key tools landlords are likely to employ to navigate these disruptions.
According to the survey from Coventry for Intermediaries, 26% of buy-to-let landlords don’t feel prepared for the Renters’ Rights Bill, which is currently at the Report Stage in the House of Lords. The remaining 74%, though, feel prepared ahead of this regulatory change.
Other potential concerns among the buy-to-let industry include a potential freeze on income tax thresholds (which 25% of landlords are unprepared for); increasing property prices (24% unprepared); and changes to energy efficiency rules (22% unprepared).
As the industry continues to evolve, Coventry’s report notes that landlords’ need for guidance will “only grow”, supporting the need for mortgage brokers to play a key role.
Sarah Brown, senior mortgage proposition manager at Coventry for intermediaries, said: “More landlords are moving over to limited company buy-to-let, so they’re asking tougher questions about tax planning, structure and long-term planning.
“We’ve listened closely to what brokers are telling us and built our limited company buy-to-let proposition around that. By combining simplicity, service, and expertise we’re helping brokers deliver better outcomes – and grow their business along the way.”
