The Intermediary –- June 2026 - Flipbook - Page 33
BUY-TO-LET
Opinion
Landlords continue
to turn towards
stabilisation
M
uch has been said
about landlords
leaving the sector,
but that’s not
really what we’re
seeing. Rather
than abandoning the sector altogether,
many professional landlords are
reshaping portfolios and trying to
buy themselves enough time to make
decisions on their own terms.
There’s a growing theme at the
smaller end of the professional
spectrum: requests for what we
would describe as stabilisation
finance, short-term funding
designed to help landlords manage
refinancing pressure without forcing
distressed sales.
In simple terms, many borrowers
are saying: “We do want to exit
eventually, but we don’t want to
exit now.”
A typical example might be a
landlord with three buy-to-lets (BTLs)
coming off a fixed rate. They know
they intend to sell, but they do not
want to commit to another long-term
product, and they also do not want to
dispose of assets quickly into a thin
market at discounted pricing.
The request is effectively: “Help us
keep the portfolio stable while we exit
in a more orderly way.”
The future story
It’s probably still too early for the
headline house price indices to tell the
full story. What we are seeing on the
ground is that values are holding up
partly because transaction volumes
remain relatively low.
The risk over the coming months
is that headline price movements
become distorted by the profile of
sellers entering the market. If the
only people selling are those under
pressure, then lower achieved
prices may reflect shorter-term
distress rather than broader
market fundamentals.
That distinction is really important.
In many cases, stabilisation finance
is really about giving fundamentally
viable borrowers enough breathing
room to avoid becoming forced sellers.
Conceptually, this isn’t a million
miles away from short-term bridging
behaviour. A borrower may use an
18-month facility to navigate a period
of higher pressure before completing a
planned sale under beer conditions.
We are also seeing more
sophisticated landlords using shortterm finance in a different way.
Some are raising capital against
unencumbered assets in order to
acquire stronger-performing stock
while opportunities exist, with loweryielding legacy properties sold later to
repay the facility.
For those operating in the
professional landlord space, that
means understanding cases that
sit outside standard templates.
Whether it’s transitional funding,
portfolio repositioning or complex
special purpose vehicle (SPV)backed acquisitions, the emphasis
is increasingly on underwriting the
borrower’s broader strategy.
Where this becomes more
complicated for banks is around
regulatory capital treatment and riskweighted assets.
Structurally, stabilisation loans are
oen treated similarly to bridging
facilities, which can carry materially
heavier capital requirements than
traditional buy-to-let lending.
That creates an interesting tension
because, historically, professional
landlords have oen demonstrated
relatively resilient performance
characteristics. These are experienced
borrowers operating property
CONOR MCDERMOTT
is director of SME lending
at LHV Bank
businesses commercially and
monitoring cashflow closely.
Yet once a facility begins to resemble
bridging or transitional finance from
a regulatory perspective, the capital
treatment changes significantly.
Layered on top of this is the broader
regulatory backdrop, particularly the
Renters’ Rights Act and the removal of
Section 21 ‘no-fault’ evictions.
Court waiting times are already a
concideration. Ministry of Justice data
shows the median time from claim to
repossession has risen to 27 weeks.
If possession timelines become
slower and more dependent on court
timetables, landlords may require
greater liquidity buffers and more
flexibility around exit planning. It also
changes how contingency periods and
refinance assumptions are assessed.
All of this underlines the
importance of timing. In many
situations, stabilisation finance isn’t
about avoiding reality, it’s about
avoiding unnecessary pressure forcing
poor decisions at the wrong point in
the cycle.
The broader point is that pressure
in the professional landlord market
isn’t automatically translating into
disorder. Many borrowers remain
fundamentally viable, but they are
becoming more selective and defensive
in how portfolios are structured.
For lenders such as ourselves,
the priority is ensuring that any
support provided, whether through
stabilisation structures, transitional
finance or acquisition funding, is
backed by realistic underwriting,
credible exit planning and a clear
understanding of the risks involved on
all sides. ●
June 2026 | The Intermediary
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