Are reports of a landlord exodus from the private rented sector overblown?
New figures from UK Finance, which represents and reports on the UK financial services sector, show that buy-to-let (BTL) lending is up significantly. In Q4 of last year, landlords took out 52,648 new buy-to-let mortgages, 39.2% higher than the same quarter in 2023. By value, BTL lending was up 47.2%, reaching a total of £9.6 billion.
Looking back a little further, though, 2023 appears to have been a recent low point for BTL lending. The number of new mortgages is still below where it was from 2018 to 2022. While lending for new house purchases has recovered to pre-pandemic levels, remortgages are down, suggesting that existing landlords are leaving.
BTL lending figures also wouldn’t capture the full number of landlords leaving the market. According to the Ministry of Housing, Communities & Local Government’s latest English Private Landlord Survey, 41% of landlords owned all of their rented properties outright in 2024 – and of the remainder, not all have BTL mortgages on all their properties.
Furthermore, estimates of the size of the private rented sector from Zoopla suggest that even higher levels of BTL lending didn’t lead to more supply. According to the property platform, the sector stalled at 5.5 million properties in 2016 and hasn’t grown since then.
The changing buy-to-let sector
Some in the sector believe that the improving lending figures are because big investors are increasing their investment even as individual BTL landlords sell up. According to Heather Hancock of property finance lenders Black & White Bridging, “Higher taxation, tighter regulation, and affordability constraints continue to squeeze out smaller landlords, making buy-to-let increasingly the domain of those with significant capital reserves”.
The UK Finance figures show that landlords are under increasing strain. BTL repossessions were up 30%, with 700 properties repossessed in Q4.
And according to Richard Donnell, Executive Director at Zoopla, single-property landlords have gone from 80% of the sector to less than 50% since 2016. He says that as well as tougher regulations and higher taxes, many landlords are also of retirement age and can realise large capital gains on their BTL properties, making it tempting to cash out. Capital growth has also slowed.
However, there are still silver linings. Average BTL yields crept up in the latest UK Finance report, reaching 7.0% on average. And the share of BTL mortgages in significant arrears fell by 7%. Growing yields could tempt more investors to enter the market, perhaps by buying rental-ready properties from landlords who are leaving the sector.
