Demand for buy-to-let lending looks set to remain resilient over the next 12 months, with a growing number of landlords planning to expand or maintain their portfolios despite rising costs, according to new research from Kensington Mortgages, BTL Barometer.
The findings reveal strong underlying optimism in the UK rental market, with nearly nine in ten landlords (89%) feeling confident about the outlook for the year ahead. Four out of five (80%) are expecting rental demand to rise, while more than three quarters (77%) anticipate property prices to increase over the same period.
Nevertheless, landlords are also bracing for sustained cost and regulatory pressures. Over three out of four (77%) expect mortgage costs to increase, while 81% report that their running costs – including repairs, insurance, utilities, and maintenance – have risen over the past year. Meanwhile nearly four in five (79%) believe the regulatory environment will become more challenging.
Interest rates were cited as the single biggest factor influencing landlord confidence (31%), followed by regulation (26%), property prices (25%), and rental demand (25%). The wider economic outlook (22%), mortgage availability (22%), and taxation (20%) were also highlighted as key considerations.
Despite these evolving conditions, most landlords are holding firm on their investment strategies. Over half (53%) plan to maintain the size of their portfolio over the next 12 months, while almost four in ten (38%) intend to expand. Just 8% are considering reducing their holdings. Encouragingly, most landlords (74%) said they currently find it easy to access BTL mortgage financing.
Kensington’s research also shed light on portfolio structure and strategy. Over half of limited company landlords (53%) hold their entire portfolio within the limited company structure. Landlords who also had personal holdings reported gross rental yields of 5.04% from their limited company portfolios on average, compared to 4.88% from personally held properties, highlighting the financial advantages of the limited company structure.
Residential properties for families (40%) are the most common asset type in landlord’s portfolios, followed by HMOs with six bedrooms or more (35%), single-tenant residential properties (33%), and HMOs with less than six bedrooms (27%), with holiday (16%) and student lets (12%) proving less popular options. In recent years, landlords report primarily increasing their holdings of family homes (21%), single-tenant homes (20%), and HMOs with six or more bedrooms (16%).
Looking ahead, almost all respondents (95%) said they are looking to diversify into different property types. Corporate lets top the list (37%), followed by HMOs with six bedrooms or more (18%), family homes (17%), and single-tenant properties (13%).
Allison Buckley, Chief Executive Officer of Kensington Mortgages, commented:
“The latest findings from our BTL Barometer underline the resilience and professionalism of today’s limited company landlords. Despite experiencing higher operating expenses and anticipating increased mortgage costs and greater regulatory complexity ahead, landlords remain firmly committed to the sector – underpinned by strong tenant demand and expectations of improving yields.
What’s particularly notable is that confidence is not translating into complacency. Many landlords are actively reviewing and diversifying their portfolios, with growing interest in corporate lets and larger HMOs, demonstrating a clear focus on long-term income and adaptability.
The limited company structure continues to play a central role in this evolution, with yields marginally higher on company-held portfolios compared to personal holdings. As the market continues to evolve, specialist lenders have an important role to play in providing the flexible, tailored financing solutions that professional landlords need to navigate change and seize opportunity.”