The Intermediary – September 2025 - Flipbook - Page 45
I N T E RV I E W
“Overall lending stands at £37bn in the 12
months to June, compared with £30bn in the
previous year.”
This growth has been grounded in a gradual
reduction of rates, as well as stronger yields,
leading to the ability for landlord borrowers to
leverage more – all of which has improved the
flow of lending.
However, this is still lower than it was prior
to the onset of the cost-of-living crisis.
Clinton also explains that there is more
here than meets the eye. With fewer than two
million BTL loans currently outstanding in the
UK, but their value remaining static, he says
that the presence of larger loans is masking an
underlying change in the balance sheet.
“What’s left in the market is larger loans in
lower numbers,” he explains.
“Why are those loans diminishing? Part of it
is that loans from 25 years ago, when buy-tolet started to come into its own, are reaching
their natural maturity now. Landlords will
be considering exiting their loan, potentially
selling or deleveraging.
“The other reason is higher mortgage costs
– this is a good opportunity for landlords to
rethink their debt. There is also evidence of
more cash purchases going on in the market.
That’s helping to offset the reduction in supply
of BTL homes in the PRS.”
Other current trends in the BTL market
include a growth in lending to limited company
structures, up to roughly 25% of lending.
“That’s a relatively young sector in the
context of the wider BTL market,” says Clinton.
The BTL market is also “shielded” by
remortgages, which means it is less
reliant on purchase transactions than
owner-occupier lending.
Clinton says: “In some ways, there’s always
an undercurrent of good supply coming
through the remortgage market, which brokers
can benefit from.”
Future market trends
While it is difficult to call, Clinton estimates
that 2026 will see a similar level of activity
to this year for the BTL lending market, and a
continuation of the same trends.
Nevertheless, the end of 2025 and the path
into 2026 are clouded by uncertainty, and there
are various factors that will affect the future of
BTL lending, and the PRS as a whole.
First, Clinton points to the upcoming Autumn
Budget, which has the potential to have a
“huge impact,” with signs already emerging
that “the purchase market is cooling ahead
of the Budget.”
“There’s lots of speculation around, for
example, property taxes – will National
Insurance be added onto rents?” Clinton says.
“The market will be wary until we have more
certainty on these things.”
Then, of course, there is the upcoming
Renters’ Rights Bill and MEES, both expected
to conclude in the coming months. Clinton
asks: “What does that implementation
timeframe look like? What bearing will that
have on demand and activity levels?”
He continues: “There’s a lot of factors to
take into account there, and then you have
the underlying economic factors such as the
direction of base rate.
“There are signs that the purchase market is
beginning to stall – there’s a definite pause for
thought among many landlords.”
Nevertheless, he adds that, even with all
these obligations making it more difficult
for “amateur landlords” to participate, this
will create more opportunities for more
professional landlords willing to take
advantage of a buyer’s market.
Clinton says: “As long as we have a market
with a big under-supply of property, there is
always going to be a good level of demand for
the PRS and buy-to-let.”
Greening the sector
For many landlords, Energy Performance
Certificates (EPCs) and MEES will be heavily
on their minds, and the entire industry is due
to be affected by upcoming changes, for better
or worse.
Nevertheless, Clinton says, the green
finance proposition across the BTL market
is “minimalist at the moment,” not least as
the market waits with bated breath to see
what expectations – and deadlines – the
Government finally lands on.
He feels that this will finally see “a change in
the mood and appetite” around green finance,
with landlords finally kicking into gear.
It is not as simple as getting clarity on the
expectations, however. Clinton argues that the
sector needs “more education overall” on the
subject of net zero housing.
Some of the responsibility for that lies
at the feet of the Government, although
landlords have an obligation to ensure for
themselves they have an awareness of legal
changes that might affect them, and this is
a “great opportunity for brokers to provide
that education.”
While there are grants available from the
Government, these are subject to a plethora of
criteria restrictions and variations. →
September 2025 | The Intermediary
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