Amateur landlords exit market, but pros find opportunity in BTL shift

This article was produced in partnership with Together

It’s safe to say the last several years have been challenging for landlords, and evolving situations continue to add pressure. From changes to taxation rules and EPC regulations to the incoming Renters’ Rights bill and rising interest rates, amateur landlords are exiting the market in droves, prompting concern for the UK rental market.

Driving the worry are recent statistics, such as a study that found the buy to let market in 2024 was down 18% from just five years ago and Together’s recent survey which shows two out of five landlords harbour strong concerns about the Labour party’s current plans and future policies. But despite the turbulence the fact remains that the sector is essential for a functioning housing market — and many landlords are finding success by adapting their strategy.

“What we’re seeing is properties owned by small-scale, amateur landlords snapped up by portfolio investors,” said Michelle Walsh (pictured), head of intermediary sales - commercial finance at Together. “It's becoming more of a professional investor sector, and that’s where the opportunities are.”

Where should landlords look to diversify?

The numbers bear out this observation. Since 2016, the number of buy to let limited companies in the UK has surpassed 400,000, a staggering 332% increase. Amid the mounting pressures on landlords, structuring their business this way enables further portfolio growth sooner.

“We’ve seen a marked shift from someone’s personal name owning one or two properties, into more of a limited company, buy to let portfolio structure, and taxation is one of the biggest drivers there,” Walsh explained.

Further, savvy landlords are diversifying their portfolios to improve their yield, seeking out assets that are returning a higher profit. Examples of this include things like Airbnb properties, holiday lets, and serviced accommodation, all of which continue to be a popular investment choice.

In addition, student accommodation is increasingly worthy of consideration — if it’s in the right location and of the right quality, Walsh stressed, noting that the days of stereotypical “student digs” are long gone.

“Today’s students expect better; I know my eldest certainly did when he was at school,” she said with a laugh. “They want modern buildings with the latest technology, communal spaces like gyms, and onsite shops for convenience.”

Walsh points to a shortage of student accommodation, particularly in London, Bristol, Manchester, and Nottingham, as a great opportunity heading into 2025. Providing the right quality in these cities “will surely find success,” she added.

Together has also seen a spike in single let dwellings being purchased and converted to HMOs because they naturally generate higher rental yields, as well as a continuing trend of purchasing in regional towns and cities where properties are cheaper. The latter strategy helps reduce the amount of Stamp Duty, especially considering the April 1 increase, and Walsh predicts areas like Manchester, Liverpool, and Birmingham will continue to experience growth.

Walsh points to social housing as another growing sector, with more lenders expanding into the space. Certainly, Together is part of this trend, harbouring a strong belief that for-profit social housing companies have a major role to play in alleviating some of the existing pressures.

“There's a lot of demand there, and landlords who provide these types of social housing properties can not only help those in need, but also achieve a strong profit,” she explained. “Overall, we’re seeing resilient landlords find ways to mitigate potential profit losses by taking advantage of continued growing trends. And here at Together, we’re ready to help them make the most of these opportunities.”

A can-do attitude and an outside the box mindset

Brokers and lenders both have a role to play in the buy to let market shift, and a willingness to think outside the box is critical when dealing with this section of customers. Brokers can best support landlords by staying up to date. That includes everything from tax concerns and regulatory changes to various government’s potential future policies, as well as keeping a finger on the pulse of evolving products and criteria across the market.

“Having that awareness of who can do what is essential in helping your customers build successful and profitable portfolios,” Walsh said, adding that Together offers a range of educational materials for broker partners, such as webinars on various topics, to help build that knowledge.

And of course, Together is renowned for bridging the gap for customers who need a little more of that creative approach. The lender offers common-sense solutions that enable swift completion to reduce cost, such as its automated valuation criteria up to 75% LTV. There’s also second charge funding against not only buy to lets under personal names, but also on limited company structures for many purposes. Another key offering is being able to use projected income for a buy to let mortgage, a significant differentiator in the space. 

To support these solutions — and the lender’s commitment to always ensuring the best possible outcome for customers — Together also boasts a robust team of underwriters, the strength of which has been deepened by recent promotions and hires. The ability to roll out flexible offerings that address a range of needs while supporting brokers and borrowers throughout the process is what Walsh relishes most about her current role.

In financial services for over two decades, she knows only too well the frustration of potential customers who don’t fit the rigid criteria of high street banks. Fifteen years ago, she was a single mother unsure she’d ever make it onto the property ladder — until she discovered specialist lending. She ultimately moved her career to the alternative side too, drawn to Together by what she calls “the can-do attitude.”

“We’re a solution-led lender, and that’s what I love about us; we look for ways to help a customer as opposed to other lenders who may be more stringent on the criteria,” Walsh said. “Together has been providing finance solutions for over 50 years now, and we will continue to open doors for everyone — hopefully for another 50 years to come.”