The phrase "buy-to-let (BTL) exodus" first surfaced more than two years ago. With rising interest rates putting the squeeze on margins, observers forecast that landlords would exit the private rented sector (PRS) in droves, the market would be awash with ex-rental properties for sale, the supply-demand imbalance would deepen, and rents, already at record levels, would be pushed even higher.

Rents have indeed continued to rise – in fact, average monthly rents have increased by around 40% in the last four years.

Rental yields have also increased, currently averaging a near-record 6.5% per year, although this varies from region to region, with the North East leading at 8.1% and London trailing at 5.7% per year.

Perhaps this goes some way to explaining why the ‘exodus’ has simply not transpired: BTL remains an attractive investment.

What’s more, landlords are a peculiarly resilient breed. Most have survived, and many continue to thrive, despite the government pressure of the last decade or so. And while many have expressed concerns about the Renters’ Rights Bill, most will no doubt adapt and grow in the post-Renters’ Rights Bill environment.

However, the shape of the BTL market has been changing under those pressures. Some of the smaller, ‘accidental’ landlords have dropped out of the market as conditions have got harder, and as a result, portfolio landlords with multiple properties now account for half of the homes in the PRS.

Landlords diversifying into HMOs and MUFBs

The majority of landlords have adapted their business strategies in response to the challenges and changes. And mortgage lenders have adapted their BTL offerings to cater for those landlords’ changing needs.

For example, five years ago, only a handful of BTL providers would lend on a house in multiple occupation (HMO). These days, an HMO offering is standard fare at most BTL lenders.

Some lenders who had previously withdrawn from the market have recently re-entered, while others are venturing into new niche pockets of the BTL market. The result has been a significant increase in complex BTL – and an accompanying rise in demand for specialist advice.

We are seeing a lot of landlords converting conventional rental homes into HMOs or extending their reach beyond the typical Victorian terraces and investing in multi-unit freehold blocks (MUFBs), where the yields can be more attractive.

Landlords looking at new regions, finance types and limited company structures

Others are expanding geographically, with many looking to the Northern regions – particularly university towns – for better returns. More investors are branching out and investing in semi-commercial properties, while the more adventurous are getting into ‘next-generation HMO’ micro-living units.

Many are buying run-down properties at auction and using bridging finance to refurbish them, or looking for green mortgages to improve energy efficiency and make their rentals more attractive for tenants (and in anticipation of future changes to Energy Performance Criteria (EPC) requirements).

Meanwhile, the shift towards limited company BTL continues apace. According to Hamptons’ analysis of Companies House data, in 2024 alone, a record-breaking 61,517 new limited companies were established for BTL purposes, a 23% increase over the previous year. Currently, approximately 70-75% of new BTL purchases are being made through limited companies, as landlords seek out the tax advantages these structures can confer.

These BTL investors are resilient, innovative and often shrewd businesspeople. But when it comes to finding and arranging the most suitable finance, they need advice. With the market becoming ever more diverse and complicated, and with more lenders entering different sub-sectors, navigating the BTL landscape is more challenging than ever – for landlords and brokers alike.

That is why it makes sense for brokers to partner with an expert. A ‘superbroker’ like Crystal Specialist Finance has extensive expertise and strong connections to specialist lenders and can pinpoint the ideal solutions for nearly any BTL scenario, regardless of its intricacy. They can assist in placing a case or manage the entire process on your behalf if preferred.

A determined and adaptable landlord deserves a broker who embodies the same qualities – or better still, two brokers collaborating to craft the best possible solution, no matter how challenging.

Jason Berry
Group Sales Director