"The one piece of advice I’d give landlords is to engage with a broker. In today’s dynamic market, their expertise is invaluable in navigating product options and securing the right deal, whether that’s refinancing or staying with an existing lender"
- Russell Anderson - Paragon Bank
PR: How are you adapting your lending criteria in response to the current challenges landlords face with affordability and regulatory change?
RA: We’ve proactively adjusted our lending criteria to support landlords navigating affordability pressures and regulatory shifts.
We’ve reduced our Interest Coverage Ratio (ICR) stress rate to 4.5% for single self-contained properties, easing affordability constraints. For limited company borrowers, we apply a 125% ICR at pay rate, while for individual landlords, the ICR ranges from 140% to 160%, depending on tax status.
We offer a range of fee structures - percentage, flat, and nil fee options - tailored to different borrowing needs and property types. Additionally, we’ve removed our £299 application fee on single self-contained properties and introduced green mortgage products offering preferential rates for EPC-rated A to C properties, aligning with sustainability goals and regulatory expectations.
PR: What types of properties or landlord profiles are currently seeing the most interest or success in securing buy-to-let finance?
RA: We’ve seen newer and younger landlords entering the market, with the next generation viewing property investment as a long-term strategy. To support these landlords, we’ve streamlined the buy-to-let mortgage application journey for those with up to 15 properties, reducing the number of supporting documents required and speeding up the process for simple limited company buy-to-let propositions.
This is made possible by harnessing our new mortgage origination platform to automatically pre-populate much of the application information required. We only initially ask for a valuation and, where the landlord holds more than three buy-to-let properties, a property schedule.
At the same time, we’re seeing strong interest from professional landlords who are diversifying into high-yielding assets such as HMOs, multi-unit blocks and student lets. These landlords are increasingly investing in what can be deemed high-end HMOs. These can feature amenities such as games rooms, en-suite bathrooms and in-room kitchenettes to cater to tenants who prefer a more premium rental experience.
This dual approach ensures we cater to both experienced investors and those just starting out. We’re building on our 30 years in the market, evolving to make us the home for all things buy-to-let.
PR: How do you see interest rates and product innovation shaping the buy-to-let lending space over the next 12 months?
RA: We’ve seen more competitive rates in the market, with Moneyfacts recently revealing a three-year low in buy-to-let borrowing costs. This is something we expect to continue, improving affordability and opening up opportunities for landlords to borrow more.
We’re observing a shift towards two-year fixed rates, which allow landlords to reassess their position sooner and potentially benefit from lower rates in the future. While five-year fixes offer higher borrowing potential due to lower stress rates, two-year deals are increasingly popular due to their flexibility and competitive pricing. Our product proposition remains focused on refining affordability and tailoring fee structures to meet diverse landlord needs.
I also think that forthcoming regulations, namely the Renters’ Rights Bill and changes to Minimum Energy Efficiency Standards (MEES), will increasingly shape the buy-to-let lending space.
Refurb-to-let products will enable landlords to improve the quality and energy efficiency of their properties, and preferential rates will help them to add more sustainable homes to their portfolios in anticipation of the new mandatory standards.
PR: Are you seeing increased demand from portfolio landlords, and how are your products designed to support more complex borrowing needs?
RA: Yes, demand from portfolio landlords remains strong.
Supporting specialist borrowing has always been an area of expertise for Paragon, so our product range is well-suited to portfolio landlords. We have lots of knowledge and experience writing limited company business, so can accommodate complex company structures, while our flat and nil fee product options suit larger loans and complex property types, like HMOs.
Beyond products, our strength lies in our relationship-driven approach.
A significant benefit for brokers working with us is direct access to experienced underwriters, which facilitates efficient processing of cases, whether simple or complex.
Landlords with exposure above £2 million are invited to meet with us to discuss business plans and growth strategies so we can identify additional ways we can support any future finance needs.
Our in-house surveyors also often meet landlords directly, ensuring a thorough understanding of their portfolios.
PR: What one piece of advice would you give to landlords looking to refinance or expand their portfolio in 2025?
RA: The one piece of advice I’d give landlords is to engage with a broker. In today’s dynamic market, their expertise is invaluable in navigating product options and securing the right deal, whether that’s refinancing or staying with an existing lender.
As interest rates ease, landlords could explore raising funds across existing portfolios to support expansion or improve the properties they already own. At Paragon, we offer further advances during the term of the loan and at the point of maturity to support customers’ business goals.
Whether refinancing or expanding, understanding your options and leveraging broker insight is key to making informed, growth-oriented decisions.
