First-time landlords are on the rise and motivated to join the market as rates fall, competition for homes is subdued and they see property as a safer bet than leaving their cash in savings or gambling on the stock market.
Among the bravest of this cohort, say the lenders and brokers serving them, are first-time buyers. Instead of following the traditional route onto the property ladder, they are forging a career as a landlord instead.
But a suspicion that these non-homeowning would-be landlords are looking for a back door into a residential mortgage means fewer lenders are willing to lend to them.
Those lenders comfortable with the risk are seeing overall first-time landlord volumes increase.
It is a surprising trend when survey results from Pegasus Insight have revealed that, following a survey of 2,000 landlords, almost 40% said they were planning an exit from the buy-to-let (BTL) market in the next five years.
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Affordability improvements pave way
So what’s inspiring this new generation of landlords to enter the market, some of whom are not even homeowners themselves?
Claire Askham, head of mortgage sales at Buckinghamshire Building Society, says falling BTL interest rates have opened the door to new landlords. The mutual has seen a 20% increase in first-time landlord applications since Q4 last year.
She said: “Interest rates have fallen to levels not seen for some time, which has had a positive impact on affordability calculations. The resulting improvement in interest coverage ratios means more applicants are able to meet lender requirements, opening up opportunities for first-time landlords who may have previously struggled to qualify.”
Much of this business, she says, is through a limited company structure, a trend that the society has seen accelerate since the end of last year.
“Some applicants do not currently own their own home and may be living in rented accommodation, but we are able to lend to them based on full affordability assessments. In many cases, these individuals see buy to let as a way to generate income that could help them eventually step onto the property ladder,” she added.
Meanwhile, older applicants are entering the first-time landlord market as a means to supplement their income in preparation for retirement, Askham said.
Additionally, the society has seen a noticeable increase in first-time landlord applications from expats – individuals who have moved overseas and want to let out their former main residence.
First-time buyer appeal
Deeksha Shah, mortgage and protection adviser and co-founder of Banyan Financial, is seeing a similar picture. Shah has been a broker for more than 10 years and says that during the last 12 months, she’s seen a noticeable increase in demand from new landlords and first-time buyers.
In 2024, between 20% and 25% of her cases came from this group of buyers, many of which are expats and first-time buyers.
“We’re seeing a lot of first-time buyers. When they say they want to buy a buy to let, obviously as an adviser you’ll always question why a buy-to-let and not a residential mortgage.
“The answer I always get is: ‘I can’t afford a residential property where I live. I want to step onto the property ladder to be part of the cycle.’ At some point, they want to consider buying residential, and by then, they’ll have some leverage and at least gain from rent,” she said.
Crunching the first-time landlord numbers
Foundation Home Loans is another lender watching an uptick in new landlord demand.
In 2024, first-time landlords made up 21% of overall business. In the first four months of this year, sales director Grant Hendry says this has risen to 24%. His analysis of their applications this year reveals that two-year fixed rates are more popular with this cohort than existing landlords – 36% compared to 32% opting for the shortest deal term.
The average loan size of a first-time landlord from the lender’s 2025 data is £138,000, compared to an average of £206,000 across all landlords.
Foundation Home Loans’ biggest region for first-time landlords, based on where the broker is registered, is the North West of England. Meanwhile, 87.6% are purchasing within a limited company.
They are also not afraid of purchasing more complex property types, such as holiday lets and houses in multiple occupation (HMOs), he adds.
Hendry said: “I think the increase is down to a number of reasons. A feeling that rates have peaked and are falling, house prices are stable, and despite the increases in stamp duty and uncertainty around the Renters Rights Bill and EPC requirements, there is still a real appetite to invest in property. It really demonstrates the strength and resilience of the market.”
Simmy Kaur, director of BTL mortgages at Lendlord – the portfolio management app – said it is seeing applicants who’ve saved a deposit but don’t feel ready to invest the whole sum into their first home, or their salary isn’t enough to meet affordability requirements.
Rather than leaving their savings sitting in the bank, she explains, they’re looking to grow a portfolio instead. Furthermore, the lack of competition among buyers for homes gives landlords more opportunity to grab a property for a good price.
Kaur added: “It’s a real mixed bag. We’re seeing a lot of first-time landlords looking at property that they want to refurbish, renovate, let out and refinance or opting for a HMO because the yields are much better.”
Giving first-time buyers a chance
To encourage the market to grow further, Kaur would like to see lenders change their criteria for first-time buyers.
“Although some will, not all lenders do and that is the primary obstacle for first-time buyers getting into the market – there are not enough lenders who will consider a first-time buyer application,” she added.
Mortgage broker Ian Hewett of Momentum Mortgages says mortgage choice can be restrictive for borrowers who haven’t owned a property in the last six months.
He said: “It takes out about 70% of the market. There are a lot more hoops to jump through because there’s a suspicion of anyone who wants to buy a buy to let who doesn’t own a property.”
He wants to see greater flexibility from lenders and a readiness to listen to the borrower’s whole story to understand the common sense behind the deal, instead of coming to the conclusion they are planning to live in it.
If you are interested in keeping up to speed with the BTL sector, you can register for the Buy to Let Event here. There are events across the country in Salford, Birmingham, London and Cardiff.
