As we move slowly into 2026, the buy-to-let market feels more settled than it has for some time. That does not mean it is without risk of course. What element of the market is?
But it does perhaps suggest that both macro- and micro-economic elements are supporting landlords continued long-term investment in the private rental sector, and that clearly advisers will play a huge role in helping their landlord borrower clients as they seek to maintain and fulfil their property ambitions.
In a recent Landbay webinar with Simon French of Panmure Liberum we looked at the economic forces likely to shape the year ahead. It was, as always, a highly informative deep dive into the economic drivers which impact us all, and I agreed with much of Simon’s assessment, but I also think it is important to translate that macro view into what it may actually mean for advisers and their landlord clients.
RATES WILL EASE, BUT DOES THE PATH MATTER MORE THAN THE DESTINATION?
Unsurprisingly, interest rates remain the main focus, but not just Bank Base Rate (BBR) of course. What also matters is where the market believes rates will settle over time, of course what swap rate levels reveal, plus how confident lenders feel when pricing for risk both now and in the future.
My view aligns with Simon’s in broad terms. Further BBR cuts look likely, but they will be gradual. Two cuts this year feels plausible. More than that looks harder to justify given the Bank of England’s caution around inflation and the UK’s structural cost pressures.
This is why a move back to 3% in 2026 looks ambitious and we should also recognise there is a large element of this already priced into current mortgage rates. Even if BBR were to fall by 50 basis points, product pricing is not going to fall by this amount.
And before such decisions are even made, the Bank is going to want to see clearer evidence that inflation risks have eased for good, not just for a quarter or two. Energy costs and labour costs still matter here, and they are not fully resolved.
That said, I do think it is reasonable to see a potential path towards 3% in 2027 if conditions continue to improve. The idea of a higher ‘neutral’ rate than we were used to before 2022 is important. Rates may fall further, but they are unlikely to return to the ultra-low levels of the past.
For advisers, this underlines a simple message: planning should be based on modest improvement, not sharp change. At the same time, it’s clearly possible to see us all active within a lower rate environment than we (and landlords) have been used to in the past couple of years. That presents opportunities, not least for those coming to the end of mortgage deals.
WHAT THIS MEANS FOR REFINANCING AND PORTFOLIO PLANNING
This rate environment does create real opportunity. Many landlords are coming off deals agreed in 2023 and 2024, when pricing was much higher. Even small reductions in rates can have a meaningful impact on monthly payments and therefore cash flow and profitability.
We are seeing landlords approach refinancing with more purpose. Some want to reduce costs and stabilise portfolios. Others are looking to use a combination of lower rates and improved affordability to release stored equity.
In a steadier market, that equity can support measured portfolio growth. This is where the more positive recent buy-to-let gross lending forecasts from IMLA are relevant. A continued recovery in both purchase and remortgage lending volumes feels likely if confidence holds and pricing remains competitive.
The adviser role here is again critical. Growth only works when leverage is sensible and rental cover is realistic. This is not the time for aggressive assumptions and while lenders like ourselves have a strong appetite to lend to landlord borrowers, it is still going to require careful understanding and a good case being made for funding.
INFLATION IS A FUNDING STORY, NOT A HEADLINE
Inflation still matters, but not in the way it is often discussed. For buy-to-let, the key issue is how inflation feeds into rates, funding costs and confidence. That is what shapes product pricing and availability.
Simon made a fair point that the UK still looks more inflation-prone than some of its peers. That explains why some MPC members are still cautious and why funding markets do not always move in line with base rate expectations. From my perspective, advisers are best served by watching funding conditions rather than headline inflation figures. That is where the real signals sit.
EMPLOYMENT TRENDS ARE A RISK, NOT A CRISIS
One area I am watching closely is the labour market. Unemployment has started to move up, of that there is no doubt. And while this does not point to an immediate shock – household balance sheets remain relatively strong in aggregate, which supports rental demand – a softer jobs market can affect rent sustainability over time, particularly in more stretched areas. Landlords should plan for resilience. Advisers should help clients think about buffers, not just best-case outcomes.
POLICY AND POLITICS STILL SHAPE CONFIDENCE
Policy risk continues to weigh on sentiment more than the data alone – we have seen that first hand with the introduction of the Renters’ Rights Bill, with landlords yet to see how these changes will impact on their profitability.
There is also still the potential for political upheaval, including the possibility of a Labour leadership contest if local election results disappoint. Markets tend to react quickly to uncertainty such as this, and also by what it could mean for change, particularly around tax and spending.
At the same time, there is growing discussion around closer ties with the EU. If that leads to better trade and labour flows over time, it could support growth and ease some inflation pressure. But these changes take time and are far from certain. In all of this, it should reinforce the value of long-term planning over short-term market timing for landlords and their advisers
AI MATTERS
AI is often discussed in broad economic terms, but it has direct relevance for advisers. At a macro level, it may support productivity and help ease inflation pressure over time. That matters for growth and rates.
At a practical level, AI tools are already improving how advice firms operate. Better research, clearer client communication and greater efficiency all matter in a market where margins can be tight and workloads are rising.
Advisers who adapt, and utilise AI to help with some of the more administrative tasks, will be better placed as refinancing and purchase activity increases. There is however a word of warning here and it comes in the form of AI and tech being used by lenders themselves in order to target existing customers directly. That threat needs to be headed off at the pass.
A YEAR FOR DISCIPLINE AND JUDGEMENT
Overall, 2026 looks like a year of stability and some expansion. That should suit professional landlords with realistic expectations and a long-term commitment to investment. It should also suits advisers who focus on structure, fit and long-term outcomes.
There is good news. Rates are easing. Opportunities for both purchase and remortgage activity exist and landlords still appreciate good advisers who deliver strong outcomes. But success will come from planning, not prediction, and particularly when it comes to existing clients, being readily available for them and in constant communication with them, will help deliver the income and success you require.
