There is a widening gap between broker demand and lender innovation in the specialist buy-to-let (BTL) market, Finova reveals.
The latest data from Finova’s The New Foundations: Building the Next Era of BTL Lending report shows that over the past year, 63% of brokers reported increased demand for specialist BTL products, with 75% seeing a particular surge in limited company BTL products.
But lenders remain cautious, citing limited broker demand (41%) and regulatory constraints (45%) as the main barriers.
Among specialist lenders, 63% say lack of broker demand is holding back innovation, exposing a mismatch between demand in the market and what lenders are offering.
When asked about barriers to innovation in specialist BTL, over a third (38%) said technology challenges, showing that many lenders are still grappling with legacy systems that can slow product development or limit their ability to respond quickly to borrower demand.
With market volatility shaping product design and influencing risk appetite, 36% of lenders pointed to evolving swap rates as the biggest barrier.
Meanwhile, 35% flagged margin pressures or low affordability, underlining the challenges of balancing competitive pricing with viable returns.
The research points toward a disconnect between lenders’ intentions to innovate and their actual investments.
More than three-quarters (78%) of lenders surveyed – rising to 83% among building societies – said their appetite for innovation is stronger than two years ago.
However, only 15% of lenders are prioritising investing in entirely new product types, and just 11% are focusing on faster decisioning engines, which Finova suggests that opportunities for innovation could be missed.
When looking at investment priorities, 21% of lenders are channelling investment into broker portals and communication tools.
However, brokers say the biggest under-delivery areas lie elsewhere: 48% point to flexibility for complex borrowers, and 43% cite speed of service, suggesting that brokers’ and lenders’ business goals are not aligned either.
Finova chief executive Gareth Richardson says: “We’re seeing a real shift in the specialist BTL market, with brokers responding quickly to growing investor demand. However, the flip side is that many lenders are still playing catch-up.”
“The gap isn’t a lack of ambition, it’s where investment is being directed. Many lenders are focusing on broker portals and other support tools, but the real opportunity lies in investing in the products the market is craving, like specialist BTL, and in the technology needed to accelerate service and product development.”
“There’s huge potential here, and those who can adapt quickly and with confidence will be the ones leading in specialist BTL.”
Last month, Finova appointed Daniel Broadhurst as commercial director. Broadhurst joins with 20 years of experience in banking and financial services.
