The Intermediary – December 2025 - Flipbook - Page 34
SPECIALIST FINANCE
Opinion
From challenge
to change
STUART DAVIDSON
is CCO at Redwood Bank
Amid challenges, property investors showed resilience
2
025 wasn’t defined by
a single shock, but by
persistent pressure.
There was a steady mix
of higher-for-longer
borrowing costs, tougher
regulation and a cautious mood
among landlords and small to medium
enterprises (SMEs).
This was a year of change,
regulatory reform, evolving tenant
rights and sustainability demands
that added complexity to an already
cautious market.
Yet amid these challenges, the
sector showed resilience. Professional
landlords scaled up, brokers worked
harder to structure viable deals, and
lenders adapted to keep good-quality
cases moving.
From Redwood Bank’s perspective,
2025 was a year defined by listening,
adapting our lending proposition
and doing what we could to help our
customers and brokers land their
mortgage deals in a challenging
environment.
Affordability shaped most
conversations this year. Landlords
approached refinancing with sharper
pencils, exploring multiple scenarios
before commiing. Higher interest
costs when refinancing deals and
elevated operating expenses put
pressure on landlords’ returns.
Brokers needed more flexibility from
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The Intermediary | December 2025
lenders. Across the cases we saw, one
trend was unmistakable: professional
landlords and experienced SMEs were
resilient. We also saw portfolio clients
grow their books as they acquired
properties divested by smaller
landlords choosing to leave a market
that now increasingly needs scale
to counter the complexities, risks
and costs of running a professional
property business. The result was a
market where strong assets, realistic
gearing and reliable income streams
maered more than ever.
Refining affordability
This environment was exactly why
Redwood introduced affordability
enhancements through the year, all
shaped by broker feedback. We made
changes to our residential investment
mortgages; reducing stress rates and
refining affordability calculations
to support landlords transitioning
from the high interest rates of the
past few years post-Covid and enable
more opportunities to refinance and
release equity.
On the commercial side, we
increased maximum terms and
lowered debt service coverage
requirements, giving SMEs and
experienced landlords greater
leverage. These changes provide
brokers with more options for
complex cases, and are a response
to the real challenges SMEs and
professional landlords are facing.
The year also presented change and
challenge for landlords in the form of
the Renters Rights Bill. The abolition
of Section 21, a landlord register and
requirements of the Decent Homes
Standards all increase risk and cost
for landlords. Whether these changes
are deemed to be ‘good’ or ‘bad’ can be
debated by others, but the outcome is
a reshaping of landlords’ obligations
and their operating models.
Simply put, the private rental
market is evolving to consist of more
professional property firms and
individuals with larger portfolios. You
need scale and depth of expertise to
make it work when margins are tight
and regulatory control is increasing.
While the Budget didn’t bring the
full-scale overhaul many feared for
professional landlords, the message
was clear; operating costs will not
ease any time soon and long-term
planning maers.
2025 was a year that tested the
market’s resilience. Affordability
dominated many conversations, and
the combined pressures of higher
costs, regulatory change and tighter
yields forced landlords, SMEs and
brokers to rethink their strategies.
These challenges are reshaping
the sector, driving out short-term
operators and accelerating the rise of
professional landlords and property
businesses with scale, expertise and a
long-term view.
Brokers who adapted, challenged
assumptions and embraced
complexity delivered real value, and
lenders that listened and innovated
made a difference. The result
is a market that is stronger and
more disciplined, beer prepared
for sustainable growth in 2026
and beyond. ●
