The buy-to-let sector has remained resilient in the face of mounting tax bills, legislative burdens and the elevated interest rates of recent years, and despite continued headwinds, the market looks set to grow further. The Intermediary Mortgage Lenders Association predicts a rise of 14% in buy-to-let lending to £38bn this year and £42bn in 2026 (up 11%), largely due to an increase in remortgaging.
This resurgence in buy-to-let remortgaging is supported by improving affordability for landlords as interest rates fall and average rents in the Private Rental Sector continue to rise.
We are not expecting a great deal of growth in buy-to-let property purchases in the near future. Indeed, according to the latest Landlord Survey from Pegasus Insight, only 6% of existing landlords plan to add to their portfolios this year. This lack of appetite for expansion is largely down to the 2% rise in Stamp Duty on additional properties introduced in October’s Budget, and concerns around the impact of the Renters’ Rights Bill (RRB).
UNEXPECTED POSITIVE FOR AFFORDABILITY?
Ironically, one unintended consequence of the RRB is likely to be a hiking of rents as landlords seek to protect themselves from future constraints the Bill will impose, which will only further improve the affordability picture for buy-to-let borrowers. But it may take time for landlord confidence to pick up after the RRB is introduced later this year and buy-to-let purchase is expected to remain relatively subdued in the medium term.
So, the lion’s share of buy-to-let business and growth this year – and next – will be generated by remortgaging, as tens of thousands of landlords roll off five-year fixed rate deals, and a smaller cohort mature off two-year arrangements. This is great news for brokers already operating in the sector, or those considering getting involved.  Since interest rates started rising in 2022, constraining affordability, many landlords maturing off fixed rates have been restricted to Product Transfers. But with borrowing costs on a downward trajectory and rents going up, there are far more options available to landlords looking to remortgage, and far more opportunities for brokers to use their skills and knowledge to identify and secure the best solutions for their clients.
When a landlord comes to refinance, it is a logical juncture for them – and their broker – to take stock and reevaluate their business and plans for the future. Over the course of a five-year fixed rate arrangement, their circumstances and financial position are likely to have changed. They may well have built up significant equity which they can use to secure cheaper borrowing, or leverage to finance energy efficiency improvements, for example. They might wish to convert a standard property into an HMO to increase their rental income. At the point of remortgage, it might be a good time to move their buy-to-let portfolio over to limited company status – they may need advice on the mortgage side and a referral to a tax specialist. Larger landlords may want to refinance a whole portfolio and look for a specialist lender to offer bespoke funding for their particular needs.
EXPERTISE ESSENTIAL
Landlords have always relied on brokers to arrange the buy-to-let mortgages essential for their investments. But as the buy-to-let landscape becomes more complex, with fewer small landlords and more professionals seeking innovative ways to successfully manage their portfolios, brokers themselves can feel they need additional expertise. That is where ‘brokers’ brokers’ such as Crystal and others can help.
A ‘broker’s broker’ employs dedicated buy-to-let experts with extensive knowledge and strong relationships with a comprehensive range of providers, from high street banks and small building societies to specialist buy-to-let lenders and private funders. They can partner with you to find the right funding solution for any landlord client, regardless of the complexity of their requirements. Or, if you are concerned that you do not have sufficient time available to do justice to a client, you can simply refer a case on, without having to relinquish your relationship with that client.
The resurgence of remortgaging and the ebbing of the PT wave which has dominated the last couple of years will give many mortgage borrowers far more product choice. But in the buy-to-let space, the return of remortgaging also brings opportunities for landlords to restructure their business and rethink their strategy. Getting the right advice and guidance has never been more important. By collaborating with a buy-to-let specialist team at a ‘broker’s broker’, you can ensure your landlord clients make the most of their next remortgage opportunity, and secure the best solution for their particular needs.
