"The growth of the specialist buy-to-let market is too significant to ignore. What was once a niche segment is now a core part of many lenders’ strategies, but the nature of the customer has changed dramatically"
- Hamza Behzad - Finova
New findings from Finova indicate that specialist buy-to-let (BTL) lending is delivering stronger margins and a lower perception of risk, yet many of the borrowers who rely most heavily on these products remain underserved.
Among lenders offering specialist BTL options, 22% say holiday lets generate the highest margins. Limited company BTL and HMO mortgages follow at 20% each, with commercial BTL at 15%. Despite the returns, 44% of lenders report that borrowers with complex needs, who typically turn to specialist BTL products, are the most underserved group in the current market. Only 29% of UK lenders operate a separate originations platform dedicated to specialist lending.
Finova, a lending and savings software provider, released the research on 1 December 2025. Its report, The New Foundations: Building the Next Era of BTL Lending, examines product demand, predicted growth and the tools lenders use to manage specialist cases.
The findings suggest that specialist BTL has become a stable component of many lending portfolios. Lenders are more likely to view default risk as lower for limited company BTL at 48%, HMOs at 56% and portfolio landlords at 43% compared with other lending types. Broker sentiment aligns with this view, as 47% also consider default risk across specialist BTL to be low, reflecting broad confidence in the sector.
Market predictions add to this optimism. Lenders expect the strongest growth to come from HMOs and multi-unit blocks at 38%, limited company BTL at 37% and holiday lets at 36%. Brokers take a slightly different view, identifying the biggest growth potential in green mortgages at 33%, followed by holiday let mortgages at 32% and limited company BTL products at 31%.
However, this confidence contrasts with the difficulties faced by the borrowers most associated with the sector. Lenders say those with complex needs are the most underserved group at 44%, shortly followed by expat or overseas borrowers at 43% and holiday let or multiple property owners at 43%. Brokers highlight several obstacles when placing specialist cases, including challenges securing finance for low EPC properties at 39%, documentation requirements for corporate and limited company structures at 37% and a lack of products for complex or non-standard properties at 34%.
A further challenge stems from the limited number of lenders using separate origination platforms for specialist lending. With fewer than one in three operating such systems, the ability to support complex borrowers remains restricted. Even so, 36% of lenders are considering adding a separate platform, and another 23% may explore the option in the future, suggesting the market could evolve to meet these customer needs.
“The growth of the specialist buy-to-let market is too significant to ignore. What was once a niche segment is now a core part of many lenders’ strategies, but the nature of the customer has changed dramatically,” said Hamza Behzad, business development director at Finova. “Today’s specialist borrowers are more complex, and legacy systems weren’t built to support the nuanced affordability assessments or KYB/KYC checks they require. Our research shows that while these products offer stronger margins and lower risk, many lenders are still relying on rigid processes that can’t keep up.
“To grow sustainably, lenders need to adapt. Those that invest in better tools and work closely with brokers to serve these customers more effectively will be best placed to lead the next era of specialist lending.”
