The Intermediary – March 2026 - Flipbook - Page 37
BUY-TO-LET
Opinion
Legislation
is transforming
property risk
T
his year is going to be
defining for buy-to-let
(BTL) lenders, with
the Renters’ Rights Act
reforms coming into
force on 1st May 2026
and the looming Warm Homes Plan
deadline falling in 2030.
From the lender’s perspective, the
first of these major policy changes
is about cashflow and tenancy
risk. The other is about the capital
outlays required of landlords and
property quality.
Together, they are pushing lenders
to re-examine what resilience means
in a rental mortgage book and,
crucially, what they need to know
at an individual property level to
measure it properly.
Taking action
We are now seeing many lenders
take concrete steps to understand
the emerging risks these changes
will bring.
On the tenancy side, the Renters’
Rights package changes the dynamics
of arrears management, timelines,
possession and the stability of rental
cashflows. Longer or less predictable
routes to vacant possession can
translate into higher expected arrears
management costs and greater
volatility in net rental income.
On the energy side, the Warm
Homes trajectory introduces a second
channel of risk. Properties that need
material upgrades face the upfront
cost of works, the disruption risk that
can create voids and the possibility of a
valuation discount where the market
begins to price future ‘leability’ into
poorer performing stock.
For a lender, that is an underwriting
issue at origination and a portfolio
issue in the back-book, particularly
where 5-year fixes and longer terms
run straight through to 2030. Most
lenders already run standard rental
affordability tests using stressed
interest rates and interest cover ratios.
What we are now seeing is a shi in
the shape of the scenarios they are
layering on.
Lenders are increasingly pressuretesting rental income for longer voids,
higher arrears incidence and slower
resolution, Stress tests increasingly
need to ask whether a landlord has
the ability and willingness to fund
upgrades, and what the valuation and
rent profile looks like if they do not.
There is also a need to understand
how these assessments affect a lender’s
overall exposure. Single asset tests
miss correlated risks. If a landlord
owns a concentration of low EPC
stock in the same region, the capital
expenditure and potential leing
constraints of upgrading properties
are not independent events.
Managing all of this in practice
means lenders require more data
from more sources. This requires
technology that can function as a data
highway with those at the front end of
assessing these risks on a property-byproperty basis – valuers.
For a long time, lenders have
been circumspect when it comes to
changing technology platforms in
any area of their business. The risks
associated with wholesale change have
outweighed the potential commercial
opportunities. Now, we are seeing the
market move on this at scale.
Partly, this is down to these changes
in legislation and regulatory policy,
but there is also a growing recognition
that data gaps affect the cost of
funds, as well as the ability to meet
compliance requirements, and in the
near future, flex lending criteria and
appetite with much more precision to
manage their own risk exposures.
MARK BLACKWELL
is COO at Cotality
In recent weeks, we have been
able to announce an important
partnership with Yorkshire Building
Society. The society has accelerated
its digital transformation by adopting
our Lender Hub – a centralised
intelligence engine.
We are now engaged in work
to integrate several lenders into
the Hub, marking a significant
shi to consolidate property and
environmental data into a single view.
Customisable dashboards and
reporting tools give access to more
information, allowing underwriting
judgements to be grounded in a fuller
understanding of collateral exposure.
Real-time data insights and adaptive
reporting allows institutions to
monitor mortgage portfolios on an
ongoing basis.
This kind of visibility supports
earlier intervention where pressures
are building and strengthens
oversight. It also allows lenders
to triage valuation instructions to
prioritise physical assessments for
higher risk homes.
Integration with existing lending
systems via application programming
interfaces (APIs) further embeds risk
analysis within day-to-day workflows,
supporting consistent, real-time
portfolio management rather than
periodic review.
It is no longer a question of
choosing between legacy systems and
modern platforms that provide the
flexibility and visibility that lenders
need. It is now possible to augment
and transition, while mitigating
the operational risk that change
oen brings. ●
March 2026 | The Intermediary
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