The Intermediary – December 2025 - Flipbook - Page 18
RESIDENTIAL
Opinion
Self-employed need help
er a few years of
decline in the wake
of the Covid-19
pandemic, the
number of selfemployed people
in the UK is on the rise. However,
what constitutes self-employment
and assessing a worker’s income has
become more complex, leaving many
borrowers with a headache.
Research by Afin Bank found that
just over a quarter of self-employed
people believe they have been turned
down for a mortgage because of their
employment status, with threequarters of the 500 people we surveyed
admiing they would consider
switching to a salary-based role if it
made geing a mortgage easier.
But the self-employed are
hugely important to the UK
economy, contributing £366bn in
2024 according to IPSE, The SelfEmployed Association. What they
need right now are intermediaries
who are switched on to their needs,
supported by lenders that take time
to understand their circumstances to
offer the best mortgage solutions.
It used to be straightforward to
define self-employment when it
came to mortgage borrowing. You
were a tradesperson or a small
business owner with several years’
worth of accounts. Today, it’s much
more complex due to changing work
practices like the growth of so-called
‘side-hustles’, and the number of
contractors and freelancers in the
workforce.
A
Changing demographics
At the end of 2019 there were more
than 3.5 million self-employed people
in the UK, according to Government
figures. A year later, during the
pandemic, that had fallen to fewer
than three million, dropping to just
above 2.8 million by the end of 2022.
There has been a slight recovery to
more than 2.9 million self-employed
workers by the end of September this
year, but what’s interesting is how the
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The Intermediary | December 2025
make-up of employment in general
has changed, and how this impacts
income paerns.
For example, people with a second
job, and therefore a second income,
increased by almost 150,000 – from
1.182 million in January 2020 to 1.329
million in September this year – and
now accounts for 3.9% of all people in
employment, according to the Office
for National Statistics (ONS).
As of February 2024, there were
also 460,000 ‘side-hustles’, according
to IPSE’s Self-Employed Landscape
2024 report, 20% higher than 2023
and accounting for 11% of all solo selfemployment, again making income
more complex.
IPSE’s analysis of Government data
also reveals a re-drawing of the solo
self-employment map with a shi
away from ‘traditional roles’. In 2024
there was a 29% increase in people
working in caring, leisure and other
service occupations compared with
2023. Over the same period, there
was a 4% growth in administrative
and secretarial workers, 2% growth
in managerial freelancers and a 2%
growth in associate professional and
technical occupations.
By comparison, the number of solo
self-employed in skilled trades fell
by 4% between 2023 and 2024, while
sales and customer service occupations
dropped by 10% over the same period,
along with an 8% fall for lower-skilled
elementary occupations.
Mortgage concerns
While the growth in self-employment
is good news for an economy that
thrives on entrepreneurship, it can
make things harder for self-employed
workers and borrowers with nonstandard income streams when
applying for a mortgage. For example,
in addition to the 26% of people who
believed they had been turned down
for a mortgage because they were
self-employed, Afin found that 23%
believed their unpredictable earnings
or fluctuating income had been an
issue; 9% believed they had been
turned down because the lender would
not accept multiple income streams;
and 13% believed that insufficient
proof of earnings or not enough years
of accounts had been a barrier.
As a bank created to support
underserved borrowers, we want
to help the self-employed and
customers with a more complex
income structure. Instead of using
automated process we assess a
customer’s situation and have
designed a proposition to overcome the
barriers self-employed borrowers
oen experience.
For example, we will consider
applicants with a minimum of two
years of trading, dropping to just
18 months with an accountant’s
reference. We will also consider
forecasted income when supported
by an accountant, which could
help borrowers in the early years
of self-employment who are able
demonstrate a good income trajectory.
For the growing number of
contractors, including those on a
