As we enter the first few weeks of Spring, there continues to be a lot of noise around the future of buy-to-let (BTL) and the wider private rented sector (PRS).
However, much as Spring carries connotations of rebirth, rejuvenation, renewal, resurrection and regrowth, I sincerely believe that, for committed landlords, these adjectives could accurately reflect BTL over the immediate and medium term.
The myriad of legislative changes and the significant resources required to stay ahead of the curve as a landlord over the past decade have undoubtedly polarised the market. As a result, the PRS has, in the main, become the home of the committed, portfolio landlord.
The modern landlord continues to display fortitude
Whether we feel this is a net positive for society as a whole is debatable, but the pathway for those landlords is clear. According to recent research from Hamptons, BTL firms have become the biggest single type of business in the UK.
With four times more BTL firms than fast-food shops registered at Companies House, this seems to show that those landlords who remain in the market, and indeed those choosing to enter now, are in it for the long term, holding property in structures that allow them to both legitimately mitigate tax and create a definitive strategy for legacy and inheritance planning.
Record breaking
The number of companies holding BTL property across the UK actually passed 400,000 in February for the first time. Between them, they hold more than 680,000 individual BTL properties.
This is sobering when taken in context. The total is up more than 400% from the number of limited companies that were holding property in February 2016 (92,975) — a year after the announcement that full mortgage interest tax relief would be withdrawn for personal ownership.
There is a net positive for committed investors
I am not trying to paint a Panglossian perspective of BTL. One must acknowledge that last July the banking body UK Finance reported that the sector had shrunk for the first time in almost three decades. Indeed, the number of new BTL mortgages granted has decreased significantly from the peak of a few years ago, due to a combination of higher interest rates, stricter taxation measures and increased regulation, which have all cooled investor enthusiasm from some smaller, amateur landlords.
Despite the apparent efforts of the government to halt the PRS, something has to give. According to Crisis, councils spent an eye-watering £2.29bn on temporary accommodation from April 2023 to March 2024 — an increase of 29% from £1.77bn the previous year.
Half of this total spend (£1.34bn) was on nightly paid accommodation and bed and breakfasts — the least suitable form of temporary accommodation.
We should remain sanguine about the prospects of landlords and brokerages that are willing to evolve and adapt
We are seeing more and more experienced landlords working with councils to provide housing for vulnerable tenants. While this offers a much-needed service to both councils and, crucially, those tenants, the growing reliance on the most unsuitable and expensive forms of temporary accommodation highlights what should be a priority for the government: the grave shortage of social housing.
Reassuringly, the modern landlord has continued to display great resilience and fortitude as they seek advice from both specialist finance brokerages and their tax experts. With a chronic shortage of housing (let alone affordable housing), demand for rental properties remains huge.
The PRS has, in the main, become the home of the committed, portfolio landlord
The upward pressure this has created has seen rents rise significantly over the past couple of years (with recent signs showing the unsustainable rapid increases in rent cooling somewhat).
All of this means that there is a net positive for those BTL investors and landlords committed to the market.
We should remain sanguine about the prospects of landlords and brokerages that are willing to evolve and adapt to the complex, professional needs of the PRS.
Matthew Rowne is director of The Buy to Let Broker
This article featured in the April 2025 edition of Mortgage Strategy.
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