Data from the UK’s financial company showed that in the first three months, there were 58,347 new purchases in the UK, worth £10.5 billion.
This number rose 38.6% to value at 46.8% compared to the same quarter a year ago, and property professionals called it the end of a “big landlord sell-off.”
The average BTL rental yield in the first quarter of this year was 6.94%, compared with 6.88% 12 months ago.
The average interest rate for all new landlord loans is 4.99%, 10 basis points lower than the previous quarter, while 41bps is lower than the same quarter in 2024.
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Banking institutions said the average BTL interest coverage ratio was 202%, up from 190% in the same period last year, while no change from the previous quarter, “reflecting a decline in interest rates.”
The number of landlords who had outstanding fixed-rate mortgages in the first three months of the year was 1.44 million, up 4.99% a year ago.
In contrast, the number of outstanding loans fell by 15.8% to 500,000.
The 11,830 BTL mortgages that were defaulted on the arrears were greater than 2.5% of the outstanding balance at the end of the quarter, down 780 from the previous quarter.
During this period, 810 landlords accounted for 28.6% of mortgage loans, a year ago the same period.
“As mortgage rates stabilize and residential properties yield rates, activity from BTL landlords begins to increase as rents rise faster than home prices,” said Richard Donnell, executive director of Zoopla.
“The sell-off for the big landlords will end after a decade of tax changes and higher borrowing costs, which has led many landlords to rethink their strategies and property holdings.
“As base rates start to decline, we are likely to see a continued increase in demand for landlords, with the focus on the intensity and quality of cash flow rather than house price inflation.”
Managing Director of Paragon Bank Mortgage Commissioner Louisa Sedgwick added: “BTL loans were the highest since the mini budget in the first quarter of the year and were in line with pre-pandemic levels, driven primarily by a surge in new purchase activity at the end of the quarter.
“This suggests that under the appropriate market conditions, landlords will invest. Demand currently exceeds supply and is expected to continue, driven by factors such as population growth and family formation.
“To meet this demand and help ease rental inflation and provide accommodation for millions of tenants across industries, it is necessary to promote an attractive investment environment with balanced regulations and economic stability.”
