This month’s Spring Statement may not have delivered dramatic housing announcements, but the data released alongside it paints a clear picture about the continued pressures facing the UK housing market.
The Office for Budget Responsibility’s latest economic and fiscal outlook suggests that growth in housing stock is expected to slow by around 40,000 homes a year through to 2030. That projection alone highlights a structural issue which has been evident for many years: the UK continues to struggle to build enough homes to meet demand.
This matters because housing supply and housing demand rarely move at the same pace. Even when policies attempt to support home ownership, whether through changes to affordability calculations, broader product availability, or lenders offering greater flexibility, the simple reality is that there are still not enough properties available for everyone who wants to buy.
When supply falls short, the private rental sector (PRS) becomes even more important. It provides the flexibility and housing capacity that the owner-occupied market cannot always deliver, particularly in areas where affordability remains stretched or where supply is constrained.
TENANT DEMAND SHOWS LITTLE SIGN OF SLOWING
Against this backdrop, it should not be surprising that tenant demand remains strong across most parts of the country. Letting agents continue to report high levels of enquiries, and while available rental stock has grown recently it still does not meet tenant demand.
For landlords, this demand underpins the long-term case for buy-to-let investment. Rental income remains the primary driver of portfolio performance, and while costs and regulatory changes have reshaped the market in recent years, the fundamental dynamics of supply and demand remain firmly in place.
It is also important to view the sector through a longer-term lens. Short-term factors such as interest rate movements, global economic uncertainty or geopolitical tensions can influence funding costs and product pricing, and those shifts can have an impact on borrowing conditions.
However, landlords who view property investment over a medium to long-term timeframe tend to focus on sustained rental demand and long-term asset growth rather than short-term market volatility.
ENSURING LENDING CRITERIA REFLECTS THE REAL MARKET
For lenders specialising in the buy-to-let sector, this environment requires criteria that reflects how landlords actually operate and the types of properties they are investing in. That has shifted in recent years and needs to be acknowledged.
This is one of the reasons we have recently introduced a number of changes across our criteria at Fleet. The objective has been straightforward: ensure advisers can place cases that reflect the real circumstances of today’s landlords while maintaining responsible lending standards.
One key change has been the removal of our minimum income requirement. Increasingly, landlords generate the majority of their income from rental properties rather than traditional employment, and it made little sense to maintain a fixed salary threshold that did not always reflect a borrower’s true financial position.
We have also extended our maximum mortgage term from 30 to 35 years, which can improve affordability and provide landlords with greater flexibility when managing cashflow across their portfolios.
For self-employed borrowers, including many landlords operating through limited companies, we have reduced the required trading history from two years to one full tax year.
This allows advisers to place cases for clients whose businesses are already performing strongly but who may not yet have a longer track record.
SUPPORTING THE PROPERTIES LANDLORDS ARE ACTUALLY BUYING
Property appetite is another area where criteria needs to reflect market realities.
Landlords today are investing in a wide range of property types, including modern apartment developments and larger blocks of flats in urban areas where tenant demand is strong.
With that in mind, we have removed the height restriction on blocks of flats within our criteria, allowing brokers to place cases on a wider range of developments, while still maintaining appropriate safeguards for specific property types.
We have also increased the maximum LTV available on new-build flats to 75%, providing landlords with greater flexibility when purchasing or refinancing newer properties which often appeal to professional tenants seeking modern accommodation.
A SECTOR THAT CONTINUES TO SUPPORT THE HOUSING SYSTEM
When you bring these elements together, the wider picture becomes clear. The PRS remains an essential component of the UK housing system because it provides homes for millions of tenants who either cannot yet buy or choose to rent for flexibility.
The latest housing supply projections only reinforce this point. If housing stock growth slows in the years ahead, the role played by private landlords becomes even more important.
For advisers and lenders operating in the buy-to-let market, the focus must therefore remain on supporting responsible investment, ensuring lending criteria reflects the realities of landlord activity and businesses, and enabling borrowers to access funding for both purchases and refinancing activity.
Landlords who approach property investment with a longer-term perspective, supported by knowledgeable advisers and specialist lenders, continue to play a crucial role in addressing the UK’s housing needs while building sustainable and profitable portfolios.
