UK Finance   – Mortgage Strategy

There were 58,347 new buy-to-let loans advanced in the UK, worth £10.5bn in the first three months of the year, data from UK Finance shows.  

This is up 38.6% by volume and 46.8% by value, compared with the same quarter a year ago, with property professionals hailing this as the end of “the big landlord sell-off”.

The average gross BTL rental yield in the first quarter of this year was 6.94%, compared with 6.88% 12 months ago. 

The average interest rate across all new landlord loans was 4.99%, 10 basis points lower than in the previous quarter, and 41bps lower than in the same quarter of 2024. 

• The average BTL interest cover ratio was 202%, up from 190% a year ago and unchanged from the previous quarter, “reflecting the downwards movement in interest rates,” says the banking body. 

The number of landlord fixed rate mortgages outstanding in the first three months of the year was 1.44 million, 4.99% up on a year ago.  

By contrast, the number of variable-rate loans outstanding fell by 15.8% to 500,000. 

There were 11,830 BTL mortgages in arrears greater than 2.5% of the outstanding balance at the end of this quarter, down by 780 from the previous quarter. 

And there were 810 landlord mortgage possessions taken up in the period, up 28.6% on the same quarter a year ago. 

Zoopla executive director Richard Donnell says: “Activity from BTL landlords is starting to increase as mortgage rates stabilise and yields from residential property move higher as rents rise faster than house prices.  

“The big landlord sell-off is coming to an end after a decade of tax changes and higher borrowing costs that saw many landlords reconsider their strategy and property holdings.  

“As base rates start to fall, we are likely to see a continued increase in demand from landlords with a greater focus on strength and quality of cashflow rather than house price inflation.” 

Paragon Bank managing director of mortgages Louisa Sedgwick adds: “BTL lending in the first quarter of the year was the highest seen since the mini-budget and in line with pre-pandemic levels, primarily driven by a surge in new purchase activity ahead of the changes to stamp duty thresholds at the end of the quarter. 

“This shows that with the right market conditions, landlords will invest. Demand currently exceeds supply and is forecast to continue, driven by factors such as population increases and household formation changes.

“To meet this demand and help to moderate rent inflation, as well as to provide a home to millions of tenants across all walks of life, it is essential to facilitate an attractive investment environment with balanced regulation and economic stability.”