Speaking at the Buy to Let Event 2025, David Whittaker, Keystone Property Finance’s CEO, said: “I can see that by the end of this year, we will all have a bigger book of business to finish the year on and 2026 should be a steady year, but it will be another year of hard work in the trenches by you brokers.”
Since 2020, there has been a lot of upheaval, whether that was the pandemic, mini Budget, war in Ukraine or political instability in the UK and US.
He said 2023 was “probably the worst year in the market” since the credit crunch from 2008 to 2011, driven by rapidly rising rates from the mini Budget leading many landlords to “go to ground”.
Whittaker said the BTL market recovered in 2024, growing 15% to £33bn in total.
“Even in these bad years, we have at least seen, in relative terms, the purchase element holding up. So, for some of your clients, they see a bad year as an opportunity for buying. Now, whether they’re buying with mortgages or cash is a debatable point, but the market didn’t totally die. It was just somewhat more subdued,” he said.
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Whittaker said that in the past, a “good year” for BTL remortgage and purchase business was between £40bn and £45bn, and there was uncertainty as to whether the BTL market would return to that “heyday” figure anytime soon, but the market was recovering and it was an “improving picture”.
He noted that the product transfer market had changed over the past few years on the BTL side, with many more lenders offering them.
The latest figures show that remortgages are on the rise and product transfers are starting to fall, but the latter was still between £8.5bn and £10bn per quarter.
“It is a significant part of your work, and lenders are better at recognising that fact,” he said.
Whittaker said BTL mortgage arrears were at “remarkably low levels” and data over the past year show this is tracking down and the “health of the market is good”.
“If we’ve got low arrears, it allows us to make less provisions for the future, which means we can produce better-price[d] products for you, for your customers,” he noted.
‘Buy to let is not vanilla’
Whittaker said “buy to let is not vanilla”, noting different ownership structures but also types of property landlords are going for.
From a Keystone perspective, he said 13.5% was for houses in multiple occupation (HMOs) and a significant proportion – one in eight historically – of its transactions were for multi-unit freehold blocks (MUFBs).
He said both these segments were expected to grow, but regulations and varying attitudes from local councils were a key concern.
“We expect to see more of this because councils have decided to make more properties HMO applicable, but we see more of this as a landlord choice as they mature their portfolios,” he said.
Whittaker added that limited companies were also a burgeoning area, and this was due to tax advice recommending it for landlords buying one or more properties, and those buying through this mechanism were younger, with an average age of 45.
“This is a new cohort of landlord[s] coming in to replace the cohort that are retiring, who were the dinner party landlords of the late 80s. They’re buying in limited companies, and they are 20-25 years younger than the cohort who are now retiring,” he said.
EPCs are ‘biggest challenge coming down the line’
Whittaker said “the biggest challenge coming down the line for all of us is what is the quality of our book when it comes to EPCs?”.
“If I do nothing as a lender and your landlords do nothing, [then]… about 65% of our people would qualify on new tenancies by the first EPC deadline, and 70% at the end with the whole book by the end,” he said.
He noted that the Energy Performance Certificate (EPC) legislation was a challenge as the “timeline is too short, and the requirements are too high”, but “we’ve got to keep pushing ahead, and we need to lift the trajectory… over the next 18-24 months”.
Whittaker said broker feedback was crucial, leading to some like Keystone bringing out Refurb to Let deals and moving away from zero interest loans or cashback deals.
He said there “isn’t a magic money tree”, as lower rates for properties with better EPC ratings or upgrades to a better EPC rating need to be subsidised by those at the other end of the spectrum.
“Unless the government gives green funds a tax break that trickles down or says to a bank, ‘if this proportion of your balance sheet is green, we’ll put a lower rate of corporation tax on it’, there’s no one else who’s going to pay for all this, unless government pays for it,” he added.
