Last month, I was writing about the various predictions for the buy-to-let (BTL) market in 2025, namely from UK Finance and Intermediary Mortgage Lenders Association (IMLA).
Interestingly, the former has only just released its firmed-up figures for BTL lending in Q3 last year, let alone Q4 to give us the full-year picture, on which (presumably) they base their 2025 predictions.
That said, it is a much more encouraging set of results than many were predicting at this time last year, with 48,862 BTL loans advanced during the July to September period, worth £8.6bn.
It means the quarter-on-quarter change was a positive one, up 6.5% by BTL loan number and 8.9% by value. These figures are of course for both purchase and remortgage, but even so, I would still not be surprised if we saw BTL purchase lending beat UK Finance’s estimate of £9bn for 2025.
Overall, predictions for 2025 and 2026 – as I have mentioned before – do feel slightly conservative, even if we’ve not yet fully seen just what an impact the decision to increase the stamp duty surcharge for BTL properties will have on landlords. For what it’s worth, I feel it will be minimal.
How the housing landscape is set to shift
Sponsored by Halifax Intermediaries
Landlords still want in on the PRS
That was a topic of discussion at our recent Key Account Conference, where the mood music in the room was also particularly positive, especially with regards to existing landlords continuing to add to portfolios, making the most of the equity they have built up in their portfolios in order to fund future purchases.
Clearly, a stamp duty increase has to be factored into the overall decision, but landlords are incredibly savvy. Plus, they continue to recognise when the investment fundamentals remain positive.
The latest figures out by the Office for National Statistics (ONS) revealed that average UK private rents had increased by 9% in the year to December 2024, which has barely moved from the 9.1% registered in the previous month. This helps maintain rental yield figures, which many landlords are seeking to maximise.
On top of this, we know that tenant demand remains strong, even if avenues to purchase for would-be first-time buyers have grown lately. Affordability to purchase remains a major obstacle, as does saving for a deposit, and there are still supply shortages, so for a large number of people, the private rental option remains the only housing option.
The changing BTL landlord profile
For advisers, keeping close to existing landlord clients is a must, particularly those with larger portfolios, as they are more likely to need advice, and need it regularly.
We’re seeing no slowdown in the number of existing borrowers who want to keep on purchasing, plus we’ve also seen a slight rise in first-time landlords, perhaps revealing that property remains a go-to asset class for many.
What is, however, also certain is that BTL has become more professional and there is far greater degree of complexity with landlords’ wants and needs, plus a growing cohort of product choice and availability, which undoubtedly needs the understanding, experience, and skill of an adviser to work through.
Support through advice
There is also more work involved for advisers, a greater responsibility, and a requirement that means they often have to keep assessing product suitability for the client at many points prior to completion. This is especially the case in a somewhat turbulent market, requiring lenders to have increased product shifts and rate or criteria changes.
The adviser cannot rest on their laurels, particularly in the Consumer Duty world we have now, and there is an expectation they will continue to ‘work the case’ in order to ensure the client has the most suitable, best-priced deal for them.
We’ve recognised this by recently reviewing and subsequently increasing our procuration fee for new business, because of this extra workload and greater responsibility, and to also ensure we pay the right fee for the work involved.
It’s something that we’ll continue to focus on, because the importance of advice for landlord borrowers can’t be understated, and it’s only through advisers that we believe these customers can get the right product and outcome for themselves, their portfolios and their tenants.
Our hope, and belief, is that they continue to be active in the BTL market, and they continue to use you for all their mortgage needs.
