Earlier this week, UK Finance unveiled its gross lending forecasts for 2026, with new BTL purchase lending expected to stay flat at £11bn and remortgage BTL lending to rise by 1% to 29%, bringing total BTL lending to £40bn.
David Whittaker, CEO of Keystone Property Finance, said it was “increasingly optimistic” about the direction of the BTL market after a “period of turbulence and uncertainty”.
He explained: “The past two years have been bruising for many, so it’s understandable that some remain cautious. But the data shows the sector has been outperforming expectations for some time. Lower borrowing costs, strong tenant demand and consistently attractive yields have all contributed to a better-than-expected year for the market.
“There are still headwinds, but we feel the fundamentals going into 2026 are encouraging, despite the fact that UK Finance has only forecast £40bn of buy-to-let lending for the year ahead.
“Unless those underlying drivers shift dramatically, and there is little evidence they will, we believe lending could reach around £42bn next year, which would make 2026 the second-strongest year since the pandemic.”
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Tanya Elmaz, managing director of intermediary sales at Together, agreed that the BTL market has “shown real resilience this year, even with all the challenges around tax changes and legislation”.
She said: “The market saw a rush of activity early on as investors tried to beat the April stamp duty hikes, though after the changes came into place, everything went pretty subdued. The market picked up a little as we entered the second half of the year, but overall growth was sluggish.
“At Together, our lending for the last three months has been strong, though the late Budget announcement definitely knocked confidence across the market and this is likely to continue as we enter the new year. Looking ahead, UK Finance is predicting flat growth for the next couple of years and, given everything landlords are dealing with, that actually feels like a win.”
Elmaz noted that investor strategies were “shifting”, with a “clear move away from the easy ‘plug-and-play’ properties toward deals that create value”.
“We’re seeing more use of bridging finance to buy below-market-value properties, often through limited companies, with plans to renovate and sometimes convert into houses of multiple occupation (HMOs) or holiday lets before refinancing.
“Property ‘flipping’ is on the decline, and holding for the long term seems to be what many are opting to do. Rising rents and a chronic housing shortage are also driving demand, which explains why high-loan-to-value (LTV) lending is becoming more commonplace.”
Another key trend in the BTL market is overseas investors, with Hamptons reporting that they accounted for over 20% of incorporations in the first half of 2025, so there’s “real potential there”, she noted.
“For brokers, the big takeaway is that the market is becoming more professional. Limited company lending is expected to pass 20% of purchases in 2025, but plenty of borrowers are still buying in their own name – which could be a great opportunity to educate clients on the benefits of incorporation,” she added.
Large refinance and professionalisation opportunity for brokers
Duncan Kreeger, Tab’s CEO, said it expected the BTL market to “remain stable in terms of overall lending volumes”.
“However, the market is changing. Individual investors may continue to reduce exposure, but professional landlords will stay active. Demand for rental housing remains strong, and that underpins the sector. The focus will shift towards refinancing, restructuring, and yield optimisation rather than expansion at scale.
“The largest opportunities will come from refinancing existing portfolios as many landlords approach the end of fixed-term products. There is also growing demand for more flexible lending options to support complex ownership structures,” he noted.
Kreeger said the main challenges would be around affordability stress tests, regulatory pressure, and the tightening of lender criteria.
“Non-standard cases will be harder to place, and the speed of execution will remain a differentiator. Lenders and brokers who can navigate complexity and deliver certainty will stand out,” he noted.
Kreeger noted that brokers should “focus on preparation and precision” and “know your client’s full portfolio position, understand their long-term objectives, and match them with the right lender and product”.
“The market will reward brokers who add value through insight and structure. This is not a volume-driven environment. It is one that requires deeper advisory support and technical capability,” he said.
Lee Trett, director and co-founder of Money Helpdesk and Echo Finances, said the BTL market will see a “significant shift”, but as suggested by UK Finance, it will “likely remain at a fairly consistent figure overall”.
“The multitude of changes that have impacted landlords, and particularly the small-scale and ‘accidental’ landlords in the UK, means that the vast majority of that £11bn will be attributed to professional portfolio landlords operating through a limited company.
“There are plenty of opportunities for landlords with an established portfolio to continue their expansion into 2026. In fact, the exit of many smaller landlords continues to push up both rent prices and demand for rental stock. The results are that there are plenty of opportunities for those with cash flow or the ability to acquire property finance, particularly in the North of England and into Scotland, where rental yields tend to be more profitable. Expanding from single let properties to HMO or multi-unit freehold blocks (MUFBs) is another potential option, particularly in university towns,” he noted.
Trett said the “biggest challenges” will be faced by “smaller landlords with properties in their own name, rather than held in a limited company”.
“High rates compounded by the Renters’ Rights regulations, and the recent budgetary announcements mean… that amateur landlords will struggle to remain profitable as we move into 2026. If you’re in this position and have not yet done so, now is the time to think about restructuring your business into a special purpose vehicle (SPV). Those with valuable rental stock could still realistically restructure their business to remain competitive,” he added.
