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By Richard Rowntree

Managing Director of Mortgages, Paragon Bank


Buy To Let Lending Hits its Highest Ever Level – so what’s next?

Buy-to-let lending hit its highest ever level last year, spurred on by record levels of tenant demand, the Stamp Duty Holiday and cheap mortgage finance. 

Figures from UK Finance showed that buy-to-let lenders completed £45.6 billion worth of business in 2021, £200 million higher than the previous peak recorded in the pre-credit crunch days of 2007.

It’s worth highlighting that lending standards in 2021 are much stricter than 15 years ago, so last year really was an impressive performance by the lending sector. 


Purchase activity drove the growth. The number of buy-to-let mortgages completed for house purchase was nearly double the previous year at 111,600, or £17.5 billion. Remortgage levels were broadly in line with 2020 levels at 153,600, or £27 billion. 

This shows to me that investors continue to value property as an asset class and will invest if the conditions are right. In a world where equities have proved volatile, you can see why. 

2021 provided a perfect storm of buy-to-let investment given the tax savings offered by Rishi Sunak and the sheer volume of people seeking to move home for a myriad of reasons. Whilst there was undoubtedly financial hardship endured by some during the pandemic, many people were also able to save during the period, which I’m sure contributed to deposits. 

Two areas of UK Finance’s figures struck me. One was the regional shift in buy-to-let completions. 

London, the South East and the South West led the jump in buy-to-let house purchases during the Stamp Duty holiday. Comparing the period when landlords received the full 3% Stamp Duty discount – July 2020 to June 2021 – with the last comparative period not impacted by Covid – July 2018 to June 2019 – showed the number of buy-to-let purchases increased by 52% in London, whilst the South East recorded a 49% increase in purchase completions.

This reversed the trend we saw after the Stamp Duty surcharge was initially introduced in April 2016. Between 2015 – the last year before the surcharge was introduced – and 2019, buy-to-let purchases fell 55% in London and 51% in the South East, whilst the South West decreased 41%. 

I will be interested to see how the market responds now the Stamp Duty holiday has ended and whether London and South East will revert to their longer-term decline. I hope not. 

The scarcity of rental property in the capital is causing surging rents and more new homes are needed in the private rented sector. A recent report for the NRLA by Capital Economics suggests that 85,000 new homes are needed in London each year to satisfy tenant demand. Given current purchase levels, the market is falling well below that. 

The other area of interest from the UK Finance numbers is the growth in the proportion of later life landlords. There was a 52% increase in the number of buy-to-let house purchases made by landlords aged between 60 and 64 in the 12 months to the end of June 2021 compared to the same period the year before. This was the highest percentage increase of any age group.

The pandemic may have led to an increase in people around this age deciding to either take redundancy or early retirement, which would have given them potential access to a lump sum of money to invest, or they were simply experienced landlords who took advantage of the Stamp Duty holiday to lower their purchasing costs. Once again, I will be interested to see whether this trend continues. 

Whilst it’s clear that 2021 won’t match the lending levels of 2021, I would urge the Government to look at the underlying reasons for last year’s success. There is clearly demand to invest in rental property and there’s excess tenant demand. Government policy must consider how best to align supply to meet this demand. 

*Richard Rowntree is managing director of mortgages at Paragon Bank 

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