A total 48,862 new buy-to-let (BTL) loans worth £8.6bn were advanced in the UK during Q3 last year, new figures released by UK Finance have revealed.

This was up 6.5% in terms of loans, and 8.9% by value, compared with the same quarter in 2023.

The banking trade body’s latest data for the BTL market also indicated that the average gross BTL rental yield was 6.93% in Q3 2024, compared with 6.53% in the same quarter a year earlier.

Reflecting the movements in interest rates, the average BTL interest cover ratio (ICR) for the UK in Q3 was 195% per cent, still up from 190% per cent in Q1 2024, and nine basis points higher than a year previously.

Director of lending at Black & White Bridging, Oli Bland, said the Q3 figures from UK Finance “paint a mixed picture” of the BTL market.

“New loans rose by 6.5% year-on-year, and average rental yields increased to 6.93%, reflecting pockets of opportunity for landlords who can navigate the challenges, Bland commented.

“The North continues to attract investors with its lower entry costs and higher returns, while the growth in fixed-rate mortgages – up 3.3% on the year – shows a shift towards greater stability amidst ongoing economic uncertainty.”

UK Finance also reported that at the end of Q3 2024, there were 13,000 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This was down 570 from the previous quarter, but 19% higher than in the same quarter a year previously.

There were also 710 BTL mortgage possessions taken in Q3, a level unchanged from the previous quarter, but an increase of 73.2% on the same quarter in 2023.

“The rise in arrears and possessions highlights the pressures many landlords are facing, with increasing costs and policy changes squeezing profitability,” Bland added.

“While the decline in arrears compared to the previous quarter is a positive sign, it’s clear that the sector remains under strain. For landlords who are prepared to adapt, there are still viable opportunities, but the overall environment requires careful planning and a long-term perspective.”

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