UK Finance noted that gross buy-to-let lending totaled £37.3 billion over the past calendar year — which is considered to be a sign of resilience in a market navigating increasing economic volatility as well as significant regulatory changes. UK Finance has also mentioned in a recent update that within that, specialist buy-to-let is emerging as a key growth engine.
Separate forecasts from suggest the sector could be potentially “worth £54 billion by 2029.”
According to the report from UK Finance, the facts are now seemingly quite clear: Specialist buy-to-let is no longer considered to be “a niche sideline.”
But many lenders’ systems and strategies “still treat it that way.”
New research from Finova reveals a widening gap between “what the market needs and what many lenders can currently deliver.”
Appetite is high, but delivery is “lagging.”
UK Finance pointed out that lenders “are not short of ambition.”
More than three-quarters (78 per cent) or the vast majority of UK based lenders – rising to 83 per cent among “building societies – say their appetite for innovation is stronger than a year ago.”
But the journey from ambition to reality is said to be “far from simple.”
Regulation is cited as the biggest barrier to innovation by “45 per cent of lenders, followed by technology limitations (38 per cent), margin pressures (35 per cent) and fluctuating swap rates (36 per cent).”
Perceptions of demand are also “misaligned.”
Many lenders fear low their specialist offerings will “be upended by low broker demand and poor profitability.”
But over half of brokers report increased demand for “specialist products from customers, suggesting that lenders’ concerns about appetite in the intermediary market are misplaced.”
The issue is less about intent and more about “priorities.”
Although quicker decisioning is widely recognised as both a competitive differentiator and a regulatory win, “only 11 per cent of lenders are prioritising investment in this area.”
Instead, most lenders are channelling efforts into “front-end communication, with broker portals and communication tools attracting the most investment (21 per cent) while just 15 per cent are focused on new product types.”
Brokers, who sit closest to landlords, paint a “consistent picture of what needs to change.”
They cite flexibility for borrowers with “more complex needs as the biggest area of under-delivery in specialist buy-to-let, closely followed by speed of service.”
At the same time, demand is strongest precisely “where complexity is highest. In Finova’s research, lenders identified holiday lets and limited company buy-to-let as the products currently delivering the highest margins.”
Yet 44 per cent of lenders say borrowers with “more complex requirements are the most underserved segment – and this needs to change. ”
Brokers, meanwhile, highlight the “practical frictions faced by borrowers with complex needs: 39 per cent say low-EPC properties are a particular pain point, 37 per cent point to complex documentation for limited companies, and 36 per cent cite regulatory uncertainty.”
These pressures slow approvals and “can deter otherwise viable investments.”
Unless these issues are addressed, there is a “risk that lenders will be left behind just as the most dynamic parts of the specialist buy-to-let market begin to accelerate.”
Closing this gap is not about technology in isolation “but about using the right technology in the right parts of the journey.”
Finova’s research shows a growing appetite for “modular origination platforms that sit alongside core systems: 36 per cent of lenders are actively considering a separate origination platform for specialist lending, and 29 per cent already have one.”
UK Finance further noted that when used well or propertly, these platforms allow lenders to pilot and “scale specialist propositions, configure different rules and workflows for distinct borrower types, and automate the decisioning journey while keeping underwriters in control.”
That, in turn, reportedly makes it easier to respond “to broker demand in limited company, green and commercial buy-to-let – and to treat specialist lending as a growth engine rather than a set of manual exceptions.”
