Buy-to-let mortgage lending increased by 20.6% in the second quarter of 2026 compared to the same period in 2025, according to data released by UK Finance, though analysts caution the comparison reflects an unusually weak baseline.
The industry body reported 58,051 new buy-to-let loans worth £10.7 billion were issued between April and June 2026, with loan values rising 25% year-on-year. However, the 2025 figures were suppressed following a rush of completions in the first quarter of that year ahead of stamp duty changes.
Remortgaging activity drives volume
Remortgages accounted for 39,631 loans during the quarter, representing a 17.6% increase by volume and 20.2% by value compared to the previous year. This figure was 470 loans higher than the first quarter of 2026, driven by landlords refinancing as fixed-rate deals expired.
Purchase lending rose 23% year-on-year to 16,026 loans, though this represented a quarterly decline of 845 loans from the first three months of 2026. The average interest rate on new buy-to-let loans stood at 4.82%, up 12 basis points from the previous quarter but 18 basis points lower than a year earlier.
Arrears decline as financial pressure eases
The data showed signs of reduced financial strain among landlords. Buy-to-let mortgages in arrears of more than 2.5% fell 25.6% year-on-year to 8,390 cases at the end of June. Possessions decreased 20.3% to 630 over the same period.
Average gross rental yields remained stable at 7.27%, compared to 7.26% in the second quarter of 2025. The figures come amid broader trends in UK property market performance, with lenders adjusting their product offerings in response to market conditions.
James Tatch, Head of Analytics at UK Finance, said: “The latest figures point to a more resilient buy-to-let market, but the headline growth should be viewed in context. Activity in the same period last year was artificially low, making the year-on-year increases look particularly strong.”
He added that higher borrowing costs were likely to constrain buy-to-let demand and underpin flatter lending growth across 2026.
Regulatory uncertainty cited
Kim Lidbury, President of ARLA Propertymark, described the increase as “extremely encouraging” despite challenges facing the private rented sector. She noted landlords had faced uncertainty around borrowing costs and affordability, alongside legislative changes including the Renters’ Rights Act in England and the Housing (Scotland) Act.
“Maintaining access to competitive finance will be crucial in supporting responsible investment and encouraging continued investment in the homes needed by tenants across the entire UK,” Lidbury stated.
The quarterly data suggests the buy-to-let sector remains active despite elevated interest rates and regulatory changes, though the sustainability of growth remains dependent on borrowing costs and policy developments.
