Paresh RajaCEO, Market Financial Solutions

The buy-to-let (BTL) market necessitates change. As it evolves, borrowers need to adapt. If they don’t, they risk being left behind.

The last year or so saw a lot of change in the property market. There was the political upheaval, which started with Labour’s substantial general election win, and continued with Rachel Reeves’ first Autumn Budget. Also, of course, there was the economic and investment picture, such as the ongoing cost-of-living crisis, tough mortgage market and relatively bleak rental outlook.

There is light at the end of the tunnel for landlords and property investors

Fortunately, despite all the challenges and the threat of regulatory upheaval, many BTL investors refused to give up on the market. Throughout 2024, there was plenty of evidence that, rather than shut up shop entirely, many landlords sought to diversify their holdings. Yes, many elected to sell up, but others sought out better returns or a more favourable sub-sector.

For instance, in early 2024, houses in multiple occupation (HMOs) became especially popular with expanding investors, given the opportunity for higher yields. Additionally, as we approached the final weeks of last year, appetite grew for commercial mortgages, as landlords explored their options outside the residential scene entirely.

But, there may have not been much support or leeway from the mainstream lenders in this space. By mid-2024, soaring borrowing costs and strict lending practices drove down the value of BTL mortgages to the lowest level in nearly three decades, according to UK Finance. Moreover, in December, the English Private Landlord Survey revealed that landlords were struggling against lending criteria on BTL mortgages, among other financial pressures.

We as lenders have a duty to support borrowers with as many tools at our disposal as possible

Looking ahead, it’s unclear if this will be resolved to any meaningful extent. UK Finance also forecast that, in 2025, there will be a fall in BTL lending across the market. This will not only hit landlords, but may also cut the number of homes available to rent in the private rental sector.

This is where the specialist finance market comes into play. Where borrowers struggle with high-street lenders’ stringent criteria and limitations, bespoke providers will be there to provide a way forward. At Market Financial Solutions, every one of our cases is assessed on its own merit, and we have no tickbox lending criteria. We embrace flexibility, and strive to find reasons to lend to our borrowers.

Investing is rarely straightforward, and our products need to reflect that

The wider market appears to be getting to grips with all this potential too. Bridging lending grew consistently throughout 2024, according to the Bridging & Development Lenders Association. In Q3, overall loan books hit £9.01bn, topping the £9bn mark for the first time. Much of this demand was likely directly driven by the BTL market too, with brokers across the industry finding that departing landlords and downsizers utilised bridging finance to help them through their plans.

Thankfully, landlords have options in the specialist lending market, but they mustn’t get complacent. HMO yields can be high, but these properties come with added complexity and legislation. Commercial properties can allow for diversification, but their potential can be swayed by sector-specific developments.

This is why we as lenders have a duty to support borrowers with as many tools at our disposal as possible. Investing is rarely straightforward, and our products need to reflect that.

Fortunately, despite all the challenges and the threat of regulatory upheaval, many BTL investors refused to give up on the market

We understand this at Market Financial Solutions, which is why we have various underwriting tools at the ready to help with affordability, and boost loan sizes. With our bespoke BTL mortgages, for example, rolled and deferred interest repayment options are available. As is top-slicing, interest coverage ratio tools, and more.

There is light at the end of the tunnel for landlords and property investors. We’ll help them reach that brighter point with confidence.