There is no denying that investors considering entering the buy-to-let market face significant challenges. It’s for this reason that our sector needs to remove as many hurdles as possible for landlords navigating a rapidly evolving economic landscape.
The specialist lending sector stands ready to play an important role. Unconstrained by the stringent rigidities of high-street providers, specialist lending is at its best when it can dynamically adapt to borrowers’ everchanging needs. As specialist lenders, we can make a difference by taking a more human approach to our lending, considering every case on its own merit, not solely based on credit ratings or a blip on a customer’s credit file from years ago.
The challenges for landlords are well known by this point. Their future horizons are clouded by a tightening in tax relief, increasingly complex and restrictive regulations, and mounting pressure to meet energy efficiency and tenant protection standards, without the clear guidelines of how to bring this to fruition. This combination is squeezing profitability and making property investment concerningly difficult to sustain, particularly for smaller portfolio landlords. In fact, recent data from Hamptons confirmed that last year buy-to-let investments fell to their lowest level since the global financial crisis.
But despite the many harsh realities, these figures risk painting an overly negative picture. As many brokers and financial advisers know, there’s also room for optimism.
Recent months have witnessed a surge in rents, as documented by the latest ONS figures. This, combined with declining interest rates, offers promising returns for landlords looking to invest. The combined figures for 2024 also mask the positive impact of the rush to complete before the stamp duty rate changes came into effect, as buy-to-let loans in Q4 2024 and Q1 2025 were up year on year by 39% and 32% respectively, according to data from UK Finance.
Enabling these green shoots in the market to continue growing is where specialist lending can play a decisive role. Our belief in the potential for this recovery explains Pepper Money’s recent return to the market. The last thing landlords need at this pivotal moment is for financing constraints to hold them back from realising their property investment goals, and we’re here to help.
The question around the UK Government’s mandated energy efficiency rules for rental properties is a case in point. Landlords will need to ensure their rental homes comply with the increase in the minimum EPC requirement from E to C. In many cases, this will require home improvements. Whether it’s installing insulation solutions, replacing an old boiler, or investing in double window glazing, all of these upgrades will require funding.
In situations like these, a clear path to borrowing can make all the difference for investors confronted with a sudden spike in their forecasted expenditure. A growing tax burden means paying out of pocket for these changes is no longer an option for most, increasing the demand for a reliable lending option investors can turn to.
Our duty as a specialist lender is to curate the right products that allow our customers to access the capital they need to succeed. As always, when considering mortgage products, flexibility, certainty, and quality service are the key elements borrowers and brokers will be looking for. Lending should be designed to maximise choice and convenience for residential landlords, whether they’re young investors or experienced proprietors.
These are the principles that guided our market re-entry earlier this month. Our renewed product suite places inclusivity front and centre, striving to maximise convenience for landlords and limited companies by not requiring a minimum income, personal bank statements, or credit scores. Instead, affordability is based on rental income verified by a RICS surveyor. We also accept multiple sources of funds to pay for deposits, including gifts, directors’ loans, and existing equity for limited company purchases.
Our decision stems from working closely with brokers and borrowers to recognise that removing unnecessary hurdles in the lending process sets up investors for success, and playing our part in enabling the sector to flourish.
Recent UK Finance data showed that in Q1 2025, buy-to-let mortgage arrears dropped to their lowest level since 2009, and repossessions remained at historic lows. So, we’re confident the market is in a good place.
This underlying resilience should be celebrated as we continue to work through this pivotal year. Alongside newcomers to the market, many landlords will be exiting their short-term buy-to-let fixes set in 2020 and 2023, with some industry commentators reckoning the total value of these matured loans could be £26.2 billion.
In this situation, it’s only natural for homeowners to check the macroeconomic temperature and consider whether their investments could see a greater return outside of bricks and mortar.
But make no mistake, it would be a shame to see an exodus of landlords. A surge in the sale of homes to cash in on investments deemed unprofitable would lead to an undesirable narrowing of choice for renters, driving properties into the hands of a select few and draining the housing market of healthy competition and housing access options.
We know the key challenges facing landlords revolve around affordability. As such, specialist lending must step up to the challenge and play a decisive role in the solution.
By working closely with brokers and borrowers, our mission is to help investors raise capital securely and efficiently by delivering greater choice into an already vibrant market that plays a fundamental role in the success of the wider property market.
