A more considered approach
The clearest evidence of this shift comes from landlords’ plans for the year ahead. Just
11% intend to expand their portfolios, compared with 38% in the spring. Meanwhile,
77% plan to maintain their current holdings, up from 53%.
These figures mark a notable change in emphasis from acquisition towards
consolidation. For established landlords, maintaining the size of a portfolio can still
involve significant decisions about which properties to retain, where to invest and how to
manage financing arrangements.
Indeed, 99% of respondents said they had made improvements to their properties in the
past 12 months, including upgrading fixtures and fittings, undertaking extensions and
improving energy efficiency. This suggests that slower portfolio growth should not be
confused with a lack of investment.
There are some encouraging signs on costs. The proportion expecting mortgage costs
to increase over the next year has fallen from 77% to 59%, while fewer respondents
report rising running costs. Nevertheless, financing remains a concern, with only 42%
now describing accessing BTL mortgage finance as easy, compared with 74% in the
previous survey.
This contrast captures an important feature of today's market. Landlords may feel more
positive about the direction of some costs, but securing suitable finance is not
necessarily becoming simpler.
The buy to let (BTL) market has experienced considerable change in recent years. Higher borrowing costs, rising operating expenses, and an evolving regulatory environment have all influenced how limited company landlords manage their investments. Yet, despite these pressures, the latest findings from Kensington Mortgages’ BTL Barometer suggest that confidence in the sector remains robust.
Four in five (80%) limited company landlords feel confident about the outlook for the UK rental market over the next 12 months. That is down from 89% in our previous survey in the spring but still represents a substantial majority. Most also expect rental yields, tenant demand and property prices to rise over the coming year, albeit in smaller proportions than previously.
Despite this moderation in confidence and expectations, the latest research does not paint a picture of landlords losing faith in the sector. Rather, it suggests that expectations are becoming more measured as investors reassess what the market can deliver and how best to position their portfolios.
Diversification remains on the agenda
Caution about expansion has not diminished interest in changing the composition of
portfolios. Almost all respondents (98%) are considering diversification into different
property types, with family residential properties attracting the greatest interest.
Kensington's own lending data also highlights the continuing importance of houses,
which accounted for 71% of limited company BTL lending value in 2026 to date.
Meanwhile, the Barometer shows growing interest in holiday and student lets, with the
proportion of landlords holding these property types increasing since the spring.
The continued appetite for diversification is particularly notable given the sharp decline
in landlords planning to expand their portfolios. It suggests that while many are reluctant
to increase their overall holdings in the near term, they remain interested in exploring
different property types and assessing how these might support their longer-term
investment objectives.
The limited company structure remains central to many of these strategies. Our survey
found that 68% of respondents now hold their entire portfolio through limited companies,
up from 53% in the spring. This highlights the importance of considering how property
investments are structured alongside decisions about property types and financing.
The differing tax treatment of property ownership structures has also come into sharper
focus following the recent Budget. While the announced increases in property income
tax will not directly affect rental profits earned through limited companies, landlords
holding properties personally will face higher rates from April 2027. This adds another
consideration when assessing how best to structure property investments.
Energy efficiency and regulation shape investment decisions
Energy efficiency is also influencing how landlords manage their portfolios. Almost all
(96%) say energy efficiency requirements are a factor in their investment decisions,
while 43% have made energy efficiency improvements over the past 12 months.
Kensington's own lending data also points to a shift in the EPC profile of properties
financed. EPC A-C rated properties accounted for 57% of lending value in 2026 to date,
an increase of 1.4 percentage points year-on-year.
More broadly, regulation remains a significant consideration for landlords, with three-
quarters (75%) expecting the regulatory environment to become more challenging over
the next 12 months. As energy efficiency becomes an increasingly important
consideration alongside wider regulatory pressures, landlords will need to carefully
assess how best to manage investment in their properties while maintaining sustainable
returns.
Ultimately, our latest BTL Barometer points to a market in transition rather than retreat.
Confidence remains widespread, but landlords are becoming more cautious about
expansion while continuing to invest in their existing properties and consider
opportunities for diversification. Rather than signalling a withdrawal from the sector,
these findings suggest landlords are taking a more considered approach to managing
their portfolios.
Andy has nearly 30 years of experience across a range of business functions and industries. He joined Kensington in February 2025 as Commercial Director with responsibility for proposition development, product management, marketing, PR and sales. Prior to joining Kensington, Andy spent 13 years at Lloyds Banking Group in senior Product, Commercial and Transformation Director roles across UK Mortgages and Savings. In his earlier career, he worked in a variety of Strategy, Sales, Marketing, Pricing, Proposition and Finance roles across the Energy, Telecoms and Confectionery industries.