The Intermediary – July 2026 - Flipbook - Page 61
SPECIALIST FINANCE
Opinion
The consequences of that
adjustment are not always immediate.
Property lending risks oen emerge
gradually, with arrears, restructures
and possession activity lagging behind
the economic events that caused them.
This has reinforced the importance
of active portfolio management.
Landlords who engaged with brokers
early, reviewed facilities well ahead
of maturity and secured appropriate
fixed rate funding have generally been
beer insulated from market volatility
than those reacting at the point of
refinance.
For brokers, this has created a new
type of conversation with clients.
Historically, discussions oen
focused on acquisition opportunities
and portfolio growth. Increasingly,
they centre on cashflow resilience,
refinancing strategy and the longterm sustainability of a portfolio.
That does not signal a weaker
market. Rather, it reflects a more
mature one.
A complex borrower
One consequence of these pressures is
that borrower profiles are becoming
less straightforward.
Many brokers are encountering
landlords with strong asset positions,
extensive experience and successful
portfolios who nevertheless have some
form of minor credit impairment
within their history.
That might be a satisfied default,
a historical County Court Judgment
or a short period of arrears linked to
a refinancing challenge, temporary
cashflow issue or wider economic
pressures.
Five or 10 years ago, these
borrowers may have been considered
unusual. Today, they are becoming
increasingly common.
That does not mean credit quality
across the market is deteriorating.
In many cases, it reflects the
reality that landlords and business
owners have navigated a period of
significant economic disruption while
continuing to operate fundamentally
sound businesses.
The key question is whether a
credit event represents an ongoing
issue or simply a moment in time
and understanding that distinction is
becoming increasingly important for
brokers and lenders.
At the same time, regulatory change
continues to reshape the operating
environment. Measures introduced
through the Renters’ Rights Act
are expected to alter how landlords
manage their properties and tenants.
While the long-term objective is
greater stability for renters, there will
inevitably be operational implications
for landlords.
The result is a market where context
maers more than ever.
Why underwriting matters
As borrower circumstances become
more varied, the limitations of purely
automated decision-making become
increasingly apparent.
Credit scores and bureau data
remain valuable tools, but they
are only one part of the picture.
They provide an indication of
risk, not necessarily a complete
explanation of it.
A landlord with a satisfied default
from several years ago may present a
Higher borrowing
costs, regulatory reform
and changing investor
behaviour are creating
a market that rewards
discipline, planning and
adaptability”
very different risk profile to someone
with ongoing payment difficulties.
Equally, a borrower with a complex
portfolio structure spanning multiple
entities, property types and income
streams may require a deeper
understanding of how those assets
perform together.
For Redwood, this is where
manual underwriting becomes
particularly valuable.
Every case is assessed on its own
merits, allowing underwriters to
consider the broader context alongside
the credit profile. That does not
mean lending standards are relaxed,
nor does it mean adverse credit is
overlooked. Rather, it enables a more
informed assessment of the borrower
and the circumstances surrounding
the application. This approach has
become increasingly relevant as
landlord businesses have grown more
sophisticated and borrower journeys
have become less linear. It is also why
transparency is so important.
One of the frustrations oen
voiced by brokers is uncertainty
around where a particular case fits.
A borrower may sit comfortably
within policy for one lender while
falling outside another’s appetite,
despite presenting a strong overall
proposition.
Providing greater clarity around
how adverse credit is assessed
helps brokers determine which
opportunities are worth pursuing and
allows more productive conversations
to take place earlier in the process.
Redwood’s tiered approach to
adverse credit is designed to support
those conversations, recognising that
not all credit events carry the same
significance and that context oen
maers when assessing risk.
Looking ahead
The landlord market is entering a
period of adjustment.
Higher borrowing costs, regulatory
reform and changing investor
behaviour are creating a market that
rewards discipline, planning and
adaptability.
At the same time, borrower
profiles are becoming more diverse.
The traditional distinction between
mainstream and specialist borrowers
is becoming less clear, with many
experienced landlords falling
somewhere between the two.
In that environment,
understanding the story behind an
application becomes just as important
as understanding the numbers.
As the market becomes more
complex market, judgement maers
more than ever. ●
July 2026 | The Intermediary
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