Inside the Buy-to-Let Lending Market: A Conversation with Keystone's David Whittaker

David Whittaker has been in the mortgage industry for nearly four decades. He co-founded what is now Mortgage Finance Brokers in 1990, was involved in the early years of buy-to-let as a recognised product, and helped found Keystone Property Finance in 2018, where he is now managing director. His perspective on where the market has come from, where it is now, and what it needs to navigate the current environment is worth hearing.

A Market That Has Professionalised Dramatically

One of the clearest things to come out of this conversation is how much landlords have changed over the past ten years.

This professionalisation has been driven partly by regulation, partly by tax changes, and partly by the market demanding it. Section 24 tax changes pushed landlords to understand their numbers in ways they had not needed to before. The growth of limited company structures forced engagement with accounting and company law. HMRC's increasing use of data triangulation, cross-referencing Land Registry ownership with tax returns and council tax records, has reduced the population of landlords operating informally.

The result is a sector that, at the portfolio end, is far more sophisticated than it was. That is good for lenders and good for tenants.

The Rate Environment and Product Volatility

David is frank about how difficult the current rate environment has been to navigate as a lender. Where product sets used to change every four to six weeks, the average lifespan of a mortgage product in the first quarter of this year was eight calendar days.

The mechanism is the swap market. When global events, whether geopolitical conflict or political uncertainty, create volatility in inflation expectations, swap rates move, and lenders have to reprice or withdraw products. This is not a decision lenders take lightly. It creates real operational pain for brokers and borrowers.

The advice David would give on rates is consistent with what we hear across the market: if a rate works for your circumstances today, the case for locking in is strong. Waiting on a standard variable rate in the hope of better conditions later is a gamble whose cost is often underestimated.

Company Structures: What Lenders Will Accept

83% of Keystone's lending now goes to limited companies, up from 55% at launch in 2018. The shift reflects the broader market trend toward SPV structures driven by tax considerations.

David's take on complexity is clear. Simple SPV structures, owned by the same directors in the trading entity and the holding company, work fine. Alphabet shares giving non-voting economic interests to family members, as long as they represent less than 20% of ownership, are manageable. What lenders struggle with is layers without a clear legitimate business rationale.

The practical implication for investors is to get tax advice and lending advice in the same room, or at least in the same conversation, before setting up a structure. A structure optimised purely for tax may be impossible or very expensive to finance against. The best structure is the one that works for both.

One notable development: a small number of lenders, including Keystone, will now consider share purchases rather than asset purchases. Where a property is held in a limited company, buying the shares in that company avoids stamp duty at the full investment rate, replacing it with a much lower rate on share transfers. This requires proper accounting and legal advice, but it is a legitimate structure that can make significant material differences on larger purchases.

HMO Valuations: What Drives the Numbers

Keystone uses a technology platform called CAMA that maps Article 4 direction areas. When a property falls within an Article 4 area and meets the criteria for an investment valuation, the lender will instruct a specialist commercial valuation rather than a standard residential one.

The value on a properly qualifying HMO has three components: the bricks-and-mortar value of the property, the planning premium created by the Article 4 constraint (which prevents others from easily replicating the HMO next door), and a capitalised element of the rental premium the property commands over a standard dwelling.

The important check here is the C3 bricks-and-mortar value. If an HMO produces an investment valuation significantly above what the underlying residential property is worth, lenders should and do apply a cross-check. Where the gap is too wide relative to comparable residential sales in the same area, they will soften the yield or adjust the value.

David noted that some lenders who have been generous with investment valuations may be starting to tighten up, particularly at the lower end of the HMO market where the premium over C3 value has been stretched.

What the Landlord Exodus Data Actually Shows

The broader picture David paints on landlord numbers is aligned with what the data shows. Mortgage accounts in the buy-to-let sector are down 2.4% from peak. That is not a mass exodus. Total outstanding lending is around £330 billion, a number that reflects a substantial, professionally managed industry.

The landlords leaving the sector are largely the accidental landlords, those with one or two properties held in personal names, who find the regulatory and tax burden has made the economics unattractive at that scale. The portfolio landlords, who hold the majority of the stock, are largely staying.

The market is consolidating and professionalising, not collapsing. New entrants come in with clear-eyed understanding of the current rules, which means they have adapted from day one rather than being disrupted by changes to a world they knew.

Practical Advice from David Whittaker

His summary advice to investors is characteristically direct.

Keep the company structure simple, especially at the beginning. Get basic accounting advice on day one and get it right, but do not go chasing complex arrangements before you understand what you are building.

Use a broker. 99% of buy-to-let mortgages go through the intermediary channel for good reasons. Products change, criteria evolves, and the broker's role is to keep you informed and to navigate the things you cannot see. No landlord can track the market daily. A good broker can.

If you want to talk through a specific deal or review your portfolio structure, get in touch via our contact form. These are exactly the conversations we have every day.