Over the past decade the buy-to-let (BTL) rulebook has been rewritten, pushing many landlords to venture outside what once might have been their investment comfort zone.

The market has grown increasingly complex, facing tighter regulation, economic ups and downs, and changing tenant demands. This has led many investors to establish limited companies, while also exploring up-and-coming locations that potentially offered better yields than those of traditional hotspots.

With the sector constantly in flux, regular dialogue between brokers, investors and lenders has never been more important. But how can brokers and lenders ensure that their landlord clients maximise returns in today’s ever-changing BTL market?

Reviewing what works

The BTL world is no place for resting on one’s laurels, whatever the role. For landlords with bigger portfolios, regular catchups and thorough property reviews can highlight areas where there may be room for improvement.

“Brokers need to be offering their clients a portfolio review,” says Mortgage Finance Brokers business development director Jeni Browne.

Whether it’s a full review or just a market update, without conversations you just can’t provide the best support

“A portfolio review is an opportunity to assess landlords’ current mortgage rate and plan for the next property finance steps. We’re approaching the point where those who took a rate just after the Mini-Budget may benefit from refinancing early and paying an early repayment charge [ERC] to get the new, lower options.”

A property review can also examine the way the portfolio is structured.

“Advisers can help landlords by ensuring that their portfolio remains as profitable as possible,” says Alexander Hall director of partnerships Stephanie Daley. “That means looking firstly at the financial aspect.

“By partnering with a trusted tax adviser, we can help landlords to ensure that the portfolio is structured in the most tax-efficient way.”

Daley adds: “Regular portfolio reviews also ensure that any finance secured against the portfolio is at the optimum interest rate, and enable any surplus equity to be used towards investing in new properties or improving existing ones.”

Where landlords are looking to change or reshape their portfolio, brokers can encourage their clients to think more widely

Browne says many landlords either do not know about or do not understand incorporation.

“A portfolio review opens the door to conversations around incorporation and signposts them to a tax adviser who can help assess if this would be worthwhile,” she explains.

Brokers can also assist with the administrative side of a lettings portfolio.

“By partnering with a reputable lettings agent, we can ensure that landlords get the best guidance on upcoming regulatory changes in the lettings space, reduce rental voids and take the heavy lifting off them,” says Daley.

A portfolio review can also be a good time to reflect on what has worked well in the past.

“Whether it’s a full portfolio review or just a market update, without conversations you just can’t provide the best support,” says Dynamo sales and operations director Tony Field.

Lenders can help by making landlords’ lives as simple as possible

“You don’t know what you don’t know. This could be new products, new trends, changes in regulation or changes in criteria; sometimes you just need to talk.

Field continues: “For example: what areas are better performing and why; what types of property are providing higher yields; should you consider some form of commercial investment and how does that work?

“Having these conversations allows your landlords to think about what works for them, what direction they want to go in and how they feel about the risks involved.”

Staying ahead

It is also important for brokers and landlords to stay ahead of the legislative curve.

“Brokers need to be really familiar with the upcoming Renters’ Rights Bill and also encourage their clients to understand how it could affect the way they manage their properties,” says Access FS mortgage sales and marketing director Nick Jones.

“Where landlords are looking to change or reshape their portfolio, brokers can encourage their clients to think more widely: perhaps a move into houses in multiple occupation, for example, where the returns can be higher; or into semi-commercial or commercial property where different tax rules apply, which may also result in higher returns.”

We’re approaching the point where those who took a rate just after the Mini-Budget may benefit from refinancing early

As it stands, from 2028 all new tenancies must have an energy performance certificate (EPC) rating of C or above, with all existing tenancies requiring the same by 2030.

“With the talk of minimum EPC levels of C still looming,” says Jones, “brokers can also help focus landlords’ thinking so that the type of property they buy is already likely to hit this benchmark, which could save them many thousands of pounds in the future if the legislation is brought in.

“Expanding into different parts of the country is also worth considering. Further north, yields may be lower but so are property prices, so acquisitions across the country can help to leverage a portfolio, spread risk, and balance out both investment and yield,” he adds.

Browne says brokers must also raise the subject of estate planning with landlords.

Landlords have had to deal with a lot in recent years, so recognising the good ones with more flexible options would be a great show of support

“Even if you can’t help directly, getting a portfolio set up in the most efficient way for your client via a third-party adviser is some of the best help you can give,” she advises.

Role of lenders

Although many conversations take place between brokers and their clients, lenders too have an opportunity to help investors maximise their returns.

“We know stress tests can restrict how much landlords can borrow, but having some flexibility around a well-established, well-run rental portfolio is something I’d like to see,” says Field.

Regular portfolio reviews also ensure that any finance secured against the portfolio is at the optimum interest rate

“Landlords have had to deal with a lot in recent years, so recognising the good ones with more flexible options would be a great show of support. Multi-property deals — where there is one underwrite and one application with multiple properties — are great and available with some lenders. But most lenders insist on individual applications, so I would like to see this more widespread.

“[Meanwhile], integrated AVMs at the front end of the application process would warm clients to moving forward and give a little more comfort before starting the process and paying fees.”

Field would also welcome the return of top slicing, which he says has “dropped off” in recent times.

Browne would like to see not only competitive rates but products without ERCs.

“With landlords more cautious around securing their next rate, many are holding off for lower rates and sitting on their current lender’s SVR,” she says.

“Introducing this type of product would help so many to save on their mortgage costs and allow them the flexibility to secure a lower deal should one become available.”

By partnering with a trusted tax adviser, we can help landlords to ensure that the portfolio is structured in the most tax-efficient way

She adds: “Another option lenders could introduce is drawdown facilities, enabling landlords to secure the funding when needed.

“For example, if a client took a remortgage of £750,000 but needed only £300,000 to clear the current mortgage, they could access the rest of the funding for future purchases as and when they needed it. This option allows landlords to grow their property portfolio and manage their mortgage costs more effectively.”

Daley believes that lenders can support landlords through operational improvements as well as products.

“Lenders can help by making landlords’ lives as simple as possible, such as with improvements on their platforms to make mortgage applications easier,” she says.

“Or even something as simple as accepting a portfolio summary on Excel instead of a set format on a branded document. Or allowing landlords to get pre-approval for future remortgage opportunities on their portfolio, making future refinance a lot more streamlined.”

Brokers need to be offering their clients a portfolio review

Educational resources with up-to-date tax and regulatory guidance are also in high demand, says Daley, whether that be workshops, webinars or online platforms.

She also highlights the need to support smaller, less experienced landlords.

“I’d like to see further product development and innovation to support various areas of the BTL market, including the often-underserved ‘dinner party landlord’.

“Where the market has become more specialised, those with only one or two BTLs can easily be left behind,” says Daley.

Moving with the market

In an ever-evolving market, regular communication can make all the difference. Investors, lenders and brokers must be adaptable and ready to change course if something isn’t working — as many have done in recent years.

Getting a portfolio set up in the most efficient way for your client via a third-party adviser is some of the best help you can give

Having regular portfolio reviews — with discussion of the mortgage, tax and location elements — can help investors feel confident they are maximising returns, while also proactively managing potential financial or regulatory issues before they arise.