Buy-to-let lending surges as arrears fall

Buy-to-let lending jumped by more than a fifth in three months to June this year, new figures from UK Finance reveal.

A total of 58,051 new buy-to-let loans worth £10.7billion were issued in the second quarter 2026, up 20.6% on the same period last year. Their value rose by 25%.

However, the comparison is with an unusually weak quarter. Lending in the same period a year ago was suppressed after landlords rushed to complete before Stamp Duty changes in the first quarter of that year.

The latest figures point to a more resilient buy-to-let market, but the headline growth should be viewed in context.”

High numbers of fixed-rate deals coming to an end also pushed up remortgaging.

Remortgages accounted for 39,631 loans, up 17.6% by number and 20.2% by value on a year earlier. That was 470 more than in the first quarter of 2026.

Lending for buy-to-let purchases rose 23% year on year to 16,026 loans. However, that was 845 less than in the previous three months.

The average interest rate on new buy-to-let loans was 4.82%, up 12 basis points on the first three months of the year, but 18 basis points lower than a year earlier.

Average yields

Average gross rental yields held steady at 7.27%, compared with 7.26% in the second quarter of 2025.

Landlords also appear to be under less financial strain. There were 8,390 buy-to-let mortgages in arrears of more than 2.5% at the end of June, down 25.6% on a year earlier.

Possessions fell 20.3% year on year to 630.

James Tatch, Head of Analytics of UK Finance, (pictured), 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.

“Looking ahead, higher borrowing costs are likely weighing down on buy-to-let demand, underpinning flatter lending growth across 2026.”

Kim Lidbury, President of ARLA Propertymark, said the uplift was “extremely encouraging” despite a challenging year for the private rented sector.

She said: “Landlords have faced continued uncertainty around the cost of borrowing, affordability and the wider financial commitments associated with property investment.

“The implications of legislation such as the Renters’ Rights Act in England and the Housing (Scotland) Act have also added further complexity.

“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.”