Landlords in the UK buy-to-let property market are losing confidence
Landlord confidence in the UK rental market has seemingly taken a hit, with fewer landlords feeling positive about rental yields compared to a year ago. That is at least according to the latest research from The Mortgage Works (TMW), the UK buy-to-let property market specialist lender. They have reported that mortgage rental yield optimism has dropped by 13%, though confidence in capital gains has seen a modest 8% uptick. Despite this slight recovery in capital gains sentiment, optimism was notably low in the third quarter of 2023. Around one-third of landlords currently feel “good” about the prospects for their own lettings business, a figure that has remained relatively stable over the past 12 months. In this blog, I will explore the new data revealed by TMW.
Insights Into The UK Buy-To-Let Property Market: More Landlords Selling Than Buying
A stark shift in market dynamics highlights growing caution among landlords. According to TMW, a significant 41% of landlords plan to sell at least one property in the next 12 months, while only 6% intend to expand their portfolio. This trend comes at a time when landlords are increasingly turning to higher rents to maintain profitability. In fact, 74% of landlords have raised rents over the past year, underscoring the pressure to offset rising costs, including higher mortgage rates and regulatory changes.
Louis Mason, a mortgage expert at Oportfolio mortgages, explains:
“The rental market is in flux. Rising mortgage costs, regulatory pressures, and fluctuating property values are driving landlords to reassess their portfolios. Many are choosing to sell properties rather than invest further, while those who remain are seeking stability through fixed-rate products and higher rents to maintain profitability.”
Remortgaging Trends: Stability Through Fixed Rates
Among leveraged landlords—those with buy-to-let (BTL) mortgages—37% plan to remortgage or take a product transfer within the next year. The preference for fixed-rate products remains high, with 33% of these landlords opting for a five-year fixed-rate mortgage. Additionally, 22% of properties being remortgaged are held in limited companies, a structure increasingly popular for tax efficiency and asset protection.
Key insights on landlord portfolios and financing include:
- 37% of leveraged landlords intend to remortgage or take a product transfer in the next 12 months.
- 33% of these landlords prefer five-year fixed-rate deals for greater financial predictability.
- 22% of BTL properties being remortgaged are held under a limited company structure.
The Typical Landlord
The data produced by TMW also gives an overview of the typical UK landlord:
The average UK landlord currently owns eight properties and achieves a gross rental yield of 6.5%. Of these landlords, 65% have at least one buy-to-let mortgage, with an average of 6.4 BTL loans per borrower.
Louis Mason adds: ‘With an average portfolio of eight properties and a 6.5% rental yield, landlords are still seeing decent returns. However, navigating higher borrowing costs means that strategic remortgaging and careful financial planning are more important than ever.”
What Does The Future Hold?
The outlook for landlords remains mixed. While confidence in rental yields has declined, the rising optimism around capital gains signals hope for long-term property value growth. However, with regulatory pressures and higher interest rates continuing to weigh on profitability, landlords must remain agile and informed to thrive in the current climate. If you are a landlord looking to make the most of your properties and your mortgages, then please feel free to give our team of buy-to-let mortgage experts a call today. We are here to help.
