Buy-to-Let Lending Rises 21%, But Most Landlords Are Refinancing Not Buying

Of the £10.7 billion of new buy-to-let lending recorded in the second quarter, £7.5 billion was remortgaging. House-purchase lending accounted for £2.7 billion.

UK Finance recorded 39,631 buy-to-let remortgages during the quarter, compared with 16,026 loans for house purchase. The increase in lending therefore reflects landlords refinancing existing portfolios as much as it reflects new acquisition activity.

Many are reaching the end of fixed-rate terms. Others are replacing debt, reducing borrowing or dealing with a lender’s current valuation and rental stress test.

A remortgage brings the property back through underwriting. The lender will assess the current value, rent, service charge, lease and borrower position. The original purchase price is not the starting point.

That is why rising lending costs do not mean refinancing is straightforward for every landlord. A lower valuation, reduced accepted rent or stricter lending terms can still leave the owner needing to contribute capital, reduce the loan or reconsider the asset.

For a detailed explanation of that process, read SmartLandlord’s Buy-to-Let Mortgage Guide.

UK Finance data shows that limited companies and larger portfolio owners drove the sharpest increase in borrowing.

Small and medium-sized limited companies arranged £2.61 billion in new buy-to-let lending during the quarter, up 60.4% from the previous year. Lending to individual landlords rose 16.7% to £8.07 billion.

Portfolio landlords with four or more mortgaged properties increased borrowing by 38.5% to £3.3 billion. Lending to landlords with one to three mortgaged properties rose 19.8% to £7.4 billion.

The figures do not establish that every limited company is acquiring more property. Much of the activity will also be refinancing. They do show where landlords are continuing to use debt as part of a professional portfolio strategy.

A limited company can suit an investor who intends to retain profit for future purchases. It also changes the available mortgage products, the cost of borrowing, tax treatment, and accounting obligations.

The ownership structure must be selected before reservation. Changing it after completion can be expensive and restrictive.

SmartLandlord’s guide to buy-to-let tax and ownership structure explains what investors should consider before choosing between personal and company ownership.

The average gross buy-to-let yield across the United Kingdom was 7.27% in the second quarter, almost unchanged from 7.26% a year earlier.

That is a useful market indicator. It is not evidence that an individual property will produce acceptable cash flow.

Gross yield compares annual rent with the purchase price. It excludes mortgage interest, product fees, management, maintenance, compliance, voids, service charges, ground rent and tax.

A landlord can therefore buy in a market with a stable gross yield and still retain less income than expected. Higher rent improves the position only where it exceeds the additional cost of finance and ownership.

The appraisal should start with the rent achieved by comparable local homes. It should then account for all foreseeable costs and test the property against the mortgage terms available at the time of application.

SmartLandlord’s Buy-to-Let Guide 2026 explains how value, income and long-term growth should work together.

The average interest rate across new buy-to-let loans was 4.82% during the second quarter. This was 12 basis points higher than the previous quarter but 18 basis points lower than a year earlier.

The figure describes loans completed between April and June. It is not a rate available to every landlord today.

Mortgage products have been repriced since the end of the quarter. The rate and loan available to an individual borrower will depend on the lender, loan-to-value, rental cover, ownership structure, property type and product fee.

A quarterly average cannot justify a purchase. Before exchange, the investor needs the actual mortgage terms, the lender’s accepted rent and the maximum loan available on that property.

Before committing to a purchase or allowing a fixed rate to expire, read SmartLandlord’s analysis of buy-to-let mortgage rates.

At the end of June, more than 2.5% of buy-to-let mortgages were in arrears: 8,390. That was 570 fewer than in the previous quarter.

Buy-to-let mortgage possessions fell to 630 during the quarter, down 20.3% from a year earlier.

The wider loan book is holding up better than these headline borrowing figures alone might suggest. That does not resolve the position of an individual landlord facing a mortgage expiry, rent shortfall, major repair or lower-than-expected valuation.

UK Finance recorded an average interest cover ratio of 217%. That was higher than a year earlier but below the 221% reported in the first quarter.

Interest cover measures the rent available to meet a lender’s mortgage-interest test. It does not measure the cash a landlord retains after management, maintenance, compliance, voids and tax. A property can meet the lender’s test and still produce weak income for its owner.

UK Finance Buy-to-Let Lending Q2 2026
UK Finance Buy-to-Let Mortgage Market Update, 21 October 2026