Buy-to-let lending increased by more than a fifth during the second quarter as landlords continued to borrow despite uncertainty surrounding the private rented sector.

A total of 58,051 new buy-to-let loans were advanced across the UK during Q2 2026, according to the latest industry figures.

That was 20.6% higher than during the same quarter last year, while the value of lending increased by 25% to £10.7bn.

Average gross rental yields also remained above 7%, at 7.27%, virtually unchanged from 7.26% a year earlier.

BORROWING COSTS

The average interest rate across new buy-to-let lending stood at 4.82% during the quarter.

That was 12 basis points higher than during the first quarter but 18 basis points below the rate recorded a year earlier.

The average interest cover ratio stood at 217%, up from 210% in Q2 2025 but down from 221% during the previous quarter.

The figures point to continued landlord borrowing activity despite higher financing costs and wider uncertainty surrounding taxation and regulation of the private rented sector.

ARREARS FALL

There were 1.46 million outstanding fixed-rate buy-to-let mortgages at the end of the quarter, down 0.7% from a year earlier.

The number of outstanding variable-rate loans fell by 3% to 450,000.

Meanwhile, the number of buy-to-let mortgages in arrears of more than 2.5% of the outstanding balance dropped to 8,390, down 570 from the previous quarter.

Possessions also fell, with 630 buy-to-let mortgaged properties taken into possession during Q2, 20.3% fewer than during the corresponding quarter of 2025.

“Lending has remained fairly robust considering the impact of the Iran War.”

Louisa Sedgwick, Paragon Bank managing director of mortgages, said: “Remortgaging continues to be the story of 2026, accounting for approximately three quarters of completed buy-to-let loans during the period.

“We expect that trend to continue throughout the rest of this year and into 2027 as five-year loans written during the buoyant market of 2021 and 2022 mature.

“Overall lending has remained fairly robust considering the impact of the Iran War on mortgaging pricing, with the value and number of loans for buy-to-let house purchase in line with the average quarterly level recorded since 2024, the period when the market entered recovery following the mini-Budget.”

And she added: “The number of new purchases today is running approximately 5,000 below the average run rate per quarter since 2013, however, and I suspect new stock entering the market is not keeping pace with exits.

“That creates long-term challenges for tenants through diminished choice and inflated rents, so policymakers need to be mindful of this growing imbalance between supply and demand as it considers next steps for housing policy.”

“The Renters’ Rights Act doesn’t seem to have deterred landlords.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While the Renters’ Rights Act was implemented during the period this data covers, it doesn’t seem to have deterred landlords.

“An increase in new buy-to-let loans advanced in the second quarter, up on the same period last year, suggests investors still recognise opportunities in the market.

“Perhaps the steadiness of average yields explains that – investing in rental property is still working for many landlords and experienced ones in particular are expanding their portfolios where opportunities arise.

“The average interest rate across new BTL loans was 12 basis points higher than the previous quarter but while this is unwelcome, it is still 18 basis points lower than the same quarter last year.

“With the number of landlords in arrears and the number of buy-to-let 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 government – the sector needs time to settle and get to grips with recent legislative changes.”