Is buy-to-let still worth it? Lending up 25% but most is landlords remortgaging, not buying

Is buy-to-let still worth it? For landlords who can make the numbers work after tax, yes, experts told Newspage, as lending jumped 25% to £10.7 billion in the second quarter of 2026, driven mostly by remortgaging rather than buying.

The latest figures from UK Finance show 58,051 new buy-to-let loans were advanced in the second quarter of 2026, up 20.6% on the same period in 2025.

Mark Alexander, Founder at Norwich-based Property118.com, said: “A 25% rise in lending makes a good headline, but it is too soon to declare a buy-to-let revival.

"More than two-thirds of these loans were remortgages, and purchase lending fell compared with the previous quarter. Last year's stamp duty disruption also flatters the annual comparison.

“Falling arrears and possessions are encouraging, but refinancing existing properties does not automatically increase the supply of rental homes. For landlords, the test remains sustainable cash flow after finance, maintenance, compliance and tax.

“Next week's Budget should give investors confidence to retain and improve homes: no further landlord tax increases, support for property improvements and a stable framework for long-term investment.

"Tenants need more homes available to rent; the Chancellor should judge policy by whether it helps deliver them.”

Are landlords returning to buy-to-let?

The average interest rate on a new buy-to-let mortgage was 4.82%, 0.12% higher than in the previous quarter but 0.18% lower than a year earlier. 

The average gross rental yield remained broadly unchanged at 7.27%.

Steven Greenall, Mortgage and Protection Advisor at Dunmow-based Protect & Lend, takes a more positive view.

He said: "It shows the sector and asset class is still strong. With house prices and rental income at their current levels, yields are very favourable for landlords currently and many are taking the opportunity to enter and grow their portfolios. 

"Landlords are adjusting to the rental reforms so would appreciate stability from Government to move forward with some confidence.”

Is the buy-to-let market becoming more professional?

The figures suggest established landlords are refinancing and expanding while smaller investors continue to leave the market.

Harry Goodliffe, Director at Winchester-based HTG Mortgages, said: "Lending is up 25% because the landlords who stayed are borrowing more. The year-on-year figures look like a comeback, but against the first quarter, purchases fell, and remortgaging rose, so this is professional landlords refinancing and adding to portfolios while smaller ones carry on selling. 

"The sector is getting more corporate, and that leaves tenants fighting over fewer homes. 

"Falling arrears and possessions are the one positive. Landlords need one thing from the Budget: no new taxes, and bring back full mortgage interest relief. I expect neither, so expect rents to keep climbing."

Are landlords coping with higher mortgage costs?

At the end of June, 8,390 buy-to-let mortgages were in arrears worth more than 2.5% of their outstanding balance. That was 25.6% fewer than a year earlier. Mortgage possessions fell by 20.3% to 630.

Stephen Perkins, Mortgage Broker and Managing Director at Norwich-based Yellow Brick Mortgages, said: “A 25% annual rise in buy-to-let lending is encouraging, but I would be cautious about calling it a full recovery. 

"Purchase lending actually fell compared with the previous quarter, while remortgaging increased, suggesting many existing landlords are refinancing and staying in the sector rather than joining the predicted selling exodus.

"The fall in arrears and possessions is also encouraging and suggests landlords are coping better than some headlines imply. What the sector needs from the Budget is stability. 

"Landlords can adapt to known costs and rules, but constant changes to tax and regulation make long-term investment decisions much harder.”

Will tax changes affect buy-to-let returns?

From April 2027, individual landlords in England and Northern Ireland will pay separate property-income tax rates of 22%, 42% and 47%. 

Mortgage interest will continue to qualify for a tax reduction rather than being deducted fully as an expense.

Harvey Dhillon, Founder & CEO at Zmartly, said: “For landlords, the lending jump is a reason to rerun the tax sums before borrowing more. From April 2027, landlords in England and Northern Ireland will pay their own, higher rates, and Wales and Scotland can set theirs. 

"Mortgage interest still won't be deducted: it will earn a tax credit at 22 per cent, so a higher-rate landlord will still pay tax on money that went straight to the bank.

“A company sets the interest against its profits, but taking the profit out brings a second tax bill, so the structure has to be settled before the loan, not after. It isn't a recovery yet. 

"Most is remortgaging, purchase lending fell on the quarter, and more borrowing says nothing about what landlords keep after tax. In next week's Budget, the Chancellor should scrap the April 2027 rise in tax on rental income."

Is buy-to-let recovering?

The figures point to stabilisation rather than a full recovery. Lending has risen and arrears have fallen, but investors bought fewer properties than in the previous quarter.

Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, said: "This is encouraging for landlords, but I would call it stabilisation rather than a full recovery. Lending is up strongly year-on-year and arrears and possessions are falling, which tells us many landlords are coping better than they were.

"But purchase lending actually fell compared with the previous quarter, so investors are still cautious.

“A lot of the activity is also remortgaging as fixed deals expire rather than landlords suddenly rushing back to buy. For the Budget, landlords need certainty more than another short-term incentive. 

"Tax, regulation and borrowing costs all affect whether a property still works financially. If policymakers want more rental supply, landlords need to be able to plan several years ahead without constantly wondering what the next tax or regulatory change will do to the numbers."

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said a lot is riding on what the Chancellor announces on Wednesday: "Ahead of next week’s Budget, landlord groups want stability: no further tax or regulatory meddling, time for recent changes to bed in, and no Capital Gains Tax rises.

“They also want tax relief on financing costs. Policies that lower entry barriers and encourage investment are vital to rebuilding rental stock and easing the pressure on tenants.”