The private rented sector has been moving in one direction for some time, with landlords increasingly treating property investment as a business rather than a secondary source of income. Those of us working closely with brokers have seen that evolution gathering pace, and recent research from Pegasus Insight reinforces just how significant the shift has become.
The study found that more than one in five (21%) landlords now operate their rental business full time, up from 17% at the end of last year. Average portfolio sizes have increased from 6.6 properties to 7.3, while two-thirds of rental properties are now held within limited company structures. The figures point to a sector where landlords are operating differently, building larger portfolios and using corporate structures as their businesses mature.
That is perhaps unsurprising given the tax and regulatory changes introduced over recent years, but it also changes the conversations brokers are having with their clients. As portfolios become larger and ownership structures become more sophisticated, funding is becoming part of a wider business strategy rather than simply supporting individual property purchases. That requires a more specialist approach from brokers and lenders alike.
Different questions, different funding needs
Professional landlords are looking beyond the next acquisition. Rather than asking whether another property can be added to the portfolio, they're increasingly considering which assets still support their long-term plans, where further investment will deliver the greatest return, whether refinancing could release capital more effectively and whether some properties no longer justify their place within the wider business.
They're certainly the conversations we're having more often, and they inevitably lead to more specialist funding requirements. Finance becomes part of a wider investment strategy rather than a standalone transaction. Increasingly, the question isn't simply whether funding is available, but whether it supports the landlord's wider objectives across the portfolio.
Funding the wider portfolio
Rather than looking at one property at a time, landlords are instead considering how acquisitions, refinancing, refurbishment and disposals fit together across the wider portfolio. Funding decisions are becoming part of a long-term strategy rather than isolated events, and that often means using different funding solutions at different stages.
That's one reason we're seeing bridging used differently than perhaps we would have five years ago. It continues to play an important role in refurbishment projects and time-sensitive purchases, but we're also seeing it used to create flexibility ahead of refinancing, support portfolio restructuring and help landlords reposition assets before moving onto longer-term funding.
Where complexity really sits
We are seeing more and more that complexity sits within the wider business itself, rather than with the property.
Larger portfolios are more likely to involve multiple SPVs, a broader mix of residential, HMO, semi-commercial and mixed-use assets, or funding requirements that need to work across several transactions. Individually, those properties may be relatively straightforward but understanding how they fit together within the wider portfolio is becoming just as important as assessing each asset in isolation.
That is where specialist lenders make the difference. It's not simply about offering specialist products but understanding what the borrower is trying to achieve and how today's funding decision supports the wider strategy.
Supporting increasingly professional landlords
The broker's role has evolved alongside the market. Brokers have always done more than arrange finance, but they're spending more time helping clients think about where their portfolio is heading next and how today's funding decision supports tomorrow's opportunity.
That places greater expectations on lenders too. Professional landlords want funding partners who understand how property businesses operate, can see beyond an individual transaction and recognise the wider commercial objectives sitting behind each case.
The Pegasus research reinforces something many of us have been seeing across the specialist market for some time. Professional landlords are running more sophisticated property businesses, and that changes the conversations they're having with brokers and lenders alike. Understanding the property remains fundamental, but today's professional landlords need funding partners who understand the wider portfolio and the strategy behind it. That's where specialist lenders can add the greatest value.
