The Intermediary –- May 2026 - Flipbook - Page 53
BUY-TO-LET
Opinion
The death of the
passive landlord
T
he UK rental market
is no longer rewarding
simplicity. For a long
time, the plan for most
property investors was
straightforward: buy a
house, find a tenant, and wait for the
property value to go up. That ‘passive’
era is effectively over. We’re seeing a
clear move away from standard houses
and toward much more complex,
high-yield investments.
Brickflow’s data, backed by
staggering numbers, reinforces that
shi. Across the industry, searches
for bridging finance for residential,
house in multiple occupation (HMO),
and mixed-use investment properties
reached a record £12.7bn in 2025. That
34% yearly jump tells us that investors
aren’t just siing on their hands
waiting for interest rates to drop.
They are using specialised tools to
pivot their portfolios before new rules
make their current setups even harder
to manage.
Splitting in two
The biggest driver here is the Renters’
Rights Act. While it is meant to help
tenants, it is making a lot of smaller,
‘accidental’ landlords nervous. Right
now, about 57% of landlords are
planning to sell off parts of their
portfolios, according to Property118,
which is a huge shi from what we
have seen over the past decade.
A clear divide is emerging across
the market. On one side, you have
landlords bowing out because the cost
of compliance and the end of Section
21 are just too much. On the other side,
there is a new breed of professional
investor who sees this chaos as an
opportunity. This is reflected in rising
mixed-use refurbishment searches,
which have nearly doubled.
By puing a shop or an office in the
same building as residential units,
they are creating a buffer against
residential-only laws while geing
more out of the asset.
This shi is increasingly a maer
of viability. Even though average UK
rents went up by 3.5% over the last
year, according to Office for National
Statistics (ONS) data, that extra cash
is usually eaten up by higher interest
rates. When you add in the fact that
house price growth is only expected to
be around 1.5% for the year, per Knight
Frank, the profit on a standard buyto-let (BTL) just doesn’t make sense
anymore for many.
It is the reason why HMO bridging
searches more than doubled in 2025,
climbing to £147m from £69m the
previous year, as we found. When
property values aren’t skyrocketing,
you have to find your profit in the
monthly rent. HMOs provide that
cashflow, but they are expensive to set
up. Brickflow is seeing more people
use bridging to take ‘tired’ buildings
and turn them into high-end,
professional rentals that actually pay
for themselves in today’s economy.
Powering the pivot
The reason we are seeing such a
massive surge in search data isn’t just
about the market shiing; it’s about
how investors are using technology to
get ahead of it. In the past, a landlord
might have waited weeks for a broker
to run some manual numbers. Now,
the more experienced investors are
using data-driven platforms to model
these complex HMO and mixed-use
scenarios in seconds.
This move toward proptech is a sign
that landlords are shiing toward
a more sophisticated, institutionalgrade strategy. When margins are
this tight, you can’t afford to guess.
The search data shows that investors
are becoming much more analytical,
using tech to scan the whole market
for the best bridging exits before they
even buy a property.
Challenge for brokers
For brokers, this means the job is
changing. The ‘best’ deal is no longer
FRAZER CAMPBELL
is CRO at Brickflow
defined solely by the interest rate,
but by its structural viability. In this
market, the exit strategy is much
more important than the cost of the
initial bridge.
There is increasing pressure on
lenders whose models struggle to
accommodate more complex assets
and don’t understand how mixed-use
or HMO projects actually work. If a
valuation doesn’t keep up with how
fast the market is moving, it is going to
leave investors stranded.
Brokers are now finding they
must be more like consultants. The
complexity of the current market
means that traditional, manual
sourcing is reaching its natural limit.
Relying on a narrow pool of familiar
lenders can inadvertently restrict a
borrower’s options.
To provide a truly comprehensive
service, accounting for everything
from Return on Capital Employed
(ROCE) to exit viability, tech tools
are becoming an essential part of the
broker’s toolkit to scan the entire
market in seconds.
What’s next?
These record-breaking numbers aren’t
a fluke. They represent a massive
reinvestment in the UK’s housing
stock. The traditional market is
shrinking, but it is being replaced by
specialists who focus on property as a
full-time business.
The path forward for 2026 is all
about navigating that complexity.
Those who are willing to use the
right data and look at mixed-use
and HMO developments will find
plenty of opportunities. The market
is becoming more complex, but for
those equipped with the right tech to
navigate it, that complexity is where
the opportunity now sits. ●
May 2026 | The Intermediary
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