The rising landlord optimism in buy to let lending

It will certainly surprise those who have continued to predict the death of buy to let due to the various regulatory, taxation and economic barriers placed in the way of UK landlords, not forgetting the most recent one in last year’s Budget: a further increase in the stamp duty surcharge to 5%. 

It was highly positive to see some of the results coming out of the latest Pegasus Insight Landlord Trends report for the last quarter of 2024, which showed the number of landlords who felt ‘good’ or ‘very good’ about their own lettings business was now up 4% to 37% over the past 12 months.

One key driving force of the market at the moment is the quest for yield, but that is also set against a backdrop where that tenant demand/supply imbalance continues to play out. Hence, we are seeing many more landlords—who might previously not have minded to purchase these properties—looking at both HMOs and multi-unit blocks much more seriously.

We understand that such properties come with more requirements and responsibilities when it comes to owning and letting them out, but landlords, once they have been in the sector for a while, tend to feel much more confident about taking these on, and this is certainly being demonstrated in terms of the lending business we are seeing.

If we’re looking at property type as a means to diversify a portfolio or de-risk it, landlords are much happier to look at short-term or holiday lets. They are also reviewing mixed-use properties, such as residential with a hint of commercial, as a means to operate in a range of different property type ‘sectors’, which can help them if, for example, one or more of their ‘vanilla’ residential properties are not currently delivering the required yield.

We tend to find that making the first property investment purchase is the big hurdle to overcome, but that generally, if they find buy to let is for them, they can move swiftly up the ladder in terms of growing portfolios. 

Part of our focus is working with first-time landlords and helping them with such ambitions—this will be a strong focus for the Foundation through 2025 and beyond, as will supporting advisers who have landlord clients or are seeking to help new ones purchase a first property.

Overall, there is much to be positive about in the buy to let space this year. We have a very strong appetite to lend to landlords who require specialist finance across multiple property types to ensure we meet their various needs and ambitions. The suggestion is that we’ll continue to see growth in buy to let lending through 2025 and 2026, and we certainly intend to play a major part in this.

*This article was originally published on BTL Insider

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