BTL lending jumps 21% as sector welcomes surge in activity

The industry has welcomed “positive” signs from an increase in BTL lending activity, with UK Finance revealing £10.7bn of mortgages was lent to landlords in Q2.

This amount was 25% higher than the same quarter in the previous year, and the number of mortgages — at 58,051 — was 20.1% higher.

The average gross BTL yield in this period was 7.27%, almost unchanged from 7.26% in the same quarter a year previously.

At the end of this period there were 8,390 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This was down 570 from the previous quarter.

Similarly, there were 630 BTL mortgage possessions in Q2, down 20.3% from the same quarter a year previously.

Raheel Butt, head of BTL underwriting at specialist lender MT Finance, sees these figures as telling a “positive story” about the health of the market.

“This is a meaningful acceleration that reflects a market finding genuine momentum,” said Raheel about the uplift in lending.

“The steady contraction in total mortgages outstanding, both fixed and variable, reflects ongoing consolidation.

For specialist lenders, that is not a concern — it means the cases we see are increasingly from professional, portfolio-focused borrowers with clear strategies and that is a healthy place for the market to be heading into the second half of 2026.”

Likewise, Kim Lidbury — president at ARLA Propertymark — took solace from the data.

“Despite what has been a challenging landscape for the private rented sector throughout the year, it is extremely encouraging to see such a positive uplift in the volume of BTL mortgage products being taken up,” said Kim.

“Overall, progress has been influenced by ongoing economic pressures and an evolving regulatory environment.

“Landlords have faced continued uncertainty around the cost of borrowing, affordability and the wider financial commitments associated with property investment.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, sees the data as evidence of resilience developing in the BTL space as landlords become more professional.

Mark added: “With the number of landlords in arrears and the number of BTL possessions falling, the outlook for the sector is brighter than one might think given that the regulatory and tax burden on investors is increasing.

“The sector is becoming more professional and with more landlords incorporating in order to maximise returns, there are plenty of opportunities out there.

“However, now is not the time for further interference from the government — the sector needs time to settle and get to grips with recent legislative changes.”