Financial experts have greeted resurgent buy-to-let market data with caution, suggesting that larger wealthier landlords are simply taking a bigger share of the sector.
The market update by UK Finance reveals that there were 52,648 new buy-to-let loans worth £9.6billion taken out in Britain in the last three months of 2024, up 39% compared with the same quarter in the previous year.
Landlords also enjoyed a slightly higher average gross rental yield, up 0.3% to 7%.
There were 1.43 million buy-to-let fixed rate mortgages outstanding in the fourth quarter of 2024, 4% up on a year previously.
Meanwhile, the number of variable rate loans outstanding fell by 15% to 518,000.
At the end of the fourth quarter, 12,610 buy-to-let mortgages were in arrears greater than 2.5% of the outstanding balance, which is 7% lower than in the same quarter a year earlier.
However, 700 buy-to-let mortgages were repossessed, an increase of 30%.
Heather Hancock, of Black & White Bridging, believes buy-to-let lending growth is likely being driven by professional and institutional landlords rather than the smaller investors who have historically formed the backbone of the sector.
“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,” she said.
“We also can’t ignore the fact that while lending volumes are up, possessions have also increased by nearly 30% year-on-year. This suggests a market that remains under significant pressure, with some landlords exiting while others with deeper pockets move in.”
Lucian Cook, of Savills, said the increase in the number of buy-to-let loans is quite surprising, given the impending abolition of the assured shorthold tenancy.
He added: “I suspect it also reflects some restructuring in the buy-to-let market with larger wealthier landlords, who often hold their property in a corporate structure, taking a bigger slice of the pie. Typically, they are better placed to deal with some of the challenges that landlords currently face.”
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