According to the latest figures from UK Finance, buy-to-let lending increased in the first quarter of 2026, driven by strong remortgage activity.
A total of 58,272 new buy-to-let loans worth £10.8 billion were made in the UK between January and March. This meant an increase in lending volume of 3.3% compared to the same period in 2025, while the total value of lending increased by 7%.
Mortgage refinancing accounted for much of the growth, with 39,160 remortgages concluded for rent during the quarter, up 11.1% year-on-year. In contrast, lending for the purchase of rental property continued to decline, falling by 14.9% to 16,871 loans.
Regional trends varied across Britain. Buy-to-let residential loans increased by 22.6% in Scotland and 20.6% in Wales, supported by high rental yields and favorable interest coverage ratios.
However, home purchasing activity fell in England, where lending fell by 18.7%, and in Northern Ireland, where it fell by 11.8%.
Rental yields also increased during the quarter. The average gross rental yield for rentals in the UK increased to 7.21%, compared to 6.93% in the first quarter of 2025.
Financing costs continued to fall, with the average interest rate on new buy-to-let loans falling to 4.71%. This was six basis points lower than the previous quarter and 29 basis points lower than the level of a year earlier.
Lower interest rates also improved affordability figures. The average buy-to-let interest coverage ratio (ICR) rose to 221% in the first quarter of 2026, compared to 204% a year earlier and 218% in the previous quarter.
Fixed-rate mortgages continued to dominate the sector. At the end of the quarter, there were 1.47 million outstanding fixed-rate mortgages, an increase of 1.4% compared to a year earlier. Meanwhile, the number of outstanding loans with variable interest rates fell by 9.5% to 453,000.
Payment arrears also showed signs of improvement. At the end of March, 8,960 buy-to-let mortgages were in arrears of more than 2.5 percent of the outstanding balance, a decrease of 560 cases from the previous quarter.
Meanwhile, the number of buy-to-let mortgage properties remained unchanged year-on-year, with 810 properties repossessed in the first quarter of 2026.