Despite higher costs and new rules, majority of landlords plan to adapt strategies rather than exit the market
Landlords are alert to the headwinds facing the sector but are still engaged in the private rented market and exploring opportunities within it, results of a landlord survey have shown.
The research, carried out across late December and early January by buy-to-let lender Landbay, found that about 40% of respondents were pessimistic about the outlook for their own buy-to-let businesses. The lender said this reflected sentiment in the immediate aftermath of the Autumn Budget, which it suggested had a noticeable effect on confidence.
Even so, most landlords described their stance as either positive or neutral, indicating that many intend to adjust their strategies rather than exit the market.
Landlords reassessing portfolios amid tax and regulatory change
Landbay noted that, despite ongoing tax and regulatory changes – including new obligations under the Renters’ Rights Act and a 2% rise in property income tax scheduled for 2027 – a large proportion of landlords remain measured and cautiously optimistic about their portfolios and future investment plans in the private rented sector.
Almost half of those surveyed said they did not currently expect to buy or sell over the next 12 months. Roughly one in three landlords, however, anticipated some form of transaction activity, while many others said they were still considering their options for the year ahead.
Asked whether the Budget would affect their plans, landlords were evenly divided: 44% said they would be more likely to buy or sell because of it, while another 44% said it would have no such effect. The remaining 12% reported that the Budget had not influenced their intentions at all.
Among landlords planning changes to their portfolios, many expected to revisit ownership structures, including the possibility of moving properties from individual ownership into limited company vehicles. Others highlighted reviews of acquisition plans and the potential need to raise rents.
Planned rent rises were generally modest. Most landlords expected any increases to track inflation or sit slightly above it, reflecting uncertainty over costs, taxation and compliance requirements rather than a push for higher margins.
Commenting on the findings, Rob Stanton (pictured right), sales and distribution director at Landbay, said the results of the survey show landlords are incredibly realistic about the current pressures in the sector, particularly around tax and regulation, but also that they are actively engaged with the market, and looking for ways to improve the performance of their portfolios.
“Landlords were not enamoured of the Budget – that is obvious – but they are taking steps to mitigate against measures which may increase their costs, and many plan to add to portfolios, shift ownership structure, and raise rents, in order to ensure they remain profitable,” Stanton said.
Remortgage potential as legacy pricing meets lower current rates
One of the clearest signals from the survey related to mortgage pricing. More than a third of landlords said the rate on their most recent buy-to-let mortgage exceeded 5%, which Landbay said was consistent with borrowing arranged during the peak of the recent rate cycle.
When asked about their next refinance, five-year fixed rates emerged as the most popular option. Landlords cited the appeal of longer-term stability and cost certainty at a time of policy and market change.
Landbay said this combination of higher “legacy” rates and a preference for longer fixes suggests there is scope for landlords to review their finance arrangements in light of current market pricing.
“One of the key takeaways is just how many landlords are carrying higher-rate mortgages arranged when pricing was less favourable,” Stanton said. “The good news here is that over the past six months in particular, pricing has shifted considerably, and advisers are likely to be able to secure some considerable savings for those borrowers coming up to remortgage.”
Advice remains central to landlord decision-making
The survey also reported strong support for the intermediary channel, with around three-quarters of landlords saying they intended to use the same adviser again for their next mortgage.
“With product transfers increasing across the market, it is vital that advisers remain close to their landlord clients,” Stanton said. “Reviewing existing borrowing and understanding how pricing has changed can make a meaningful difference to monthly costs and future planning.”
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