One of the biggest shifts we have seen in specialist lending over the last few years has been that more and more transactions now sit somewhere between traditional residential and commercial thinking.
Historically, specialist cases were often easier to identify because the complexity usually sat in the asset. Non-standard construction, heavier refurbishment, or unusual property types were typically the defining factors behind the lending decision.
That still exists, but the market is a lot less defined by neat categories than it was just a few years ago. Today, we tend to see more of the complexity centring on the structure, income, ownership and longer-term strategy involved in a case. Brokers are bringing forward more cases where the property itself may appear relatively straightforward, but the discussion becomes far more nuanced once you get into aspects like how the asset is expected to operate, how income is generated, what flexibility the borrower wants over time and where it sits within the wider portfolio.
Quite often now, the property itself is the straightforward part, particularly once the wider investment strategy starts coming into focus.
Specialist assets are being viewed differently
Semi-commercial is a good example of that shift. Two properties can look broadly similar on paper but require completely different lending considerations once you get into the details. The strength of the income, the tenant itself, future plans for the asset and even how it sits within the wider portfolio can all change how the case is viewed quite materially.
You also see more investors wanting optionality built into the structure much earlier. Some may intend to hold long term but still want flexibility around future refinance or asset disposal, while others may be repositioning parts of a portfolio over time, blending different asset classes and funding strategies as conditions evolve.
Assessing the property alone rarely tells the full story anymore, particularly where investors are combining different approaches within the same portfolio.
The same applies across areas such as holiday lets and PBSA, where what has changed is not necessarily the sectors themselves, but how experienced investors are operating within them.
Take holiday lets, for example. Where once they were assessed as isolated assets, today we tend to see them being considered as part of a broader portfolio strategy. Income profiles can fluctuate materially across the year, management quality plays a much bigger role operationally and some borrowers are actively balancing short-term yield against longer-term flexibility depending on how the wider portfolio performs.
PBSA conversations have evolved in a similar way, with the focus often just as much around stabilisation, operational performance and refinance planning as it is on acquisition or development itself. In some cases, the real lending discussion starts after practical completion rather than before it.
A rigid view of asset type alone no longer reflects how a large part of the specialist market now operates, particularly when investors are actively moving between different funding approaches and ownership strategies over time. That’s why commercial judgement has become so integral.
Funding strategy is becoming part of the investment strategy
At HTB, many of the conversations we are having with brokers now sit around how borrowers intend to structure, refinance or reposition assets over the long-term, rather than simply whether the property itself fits appetite. More investors are thinking across multiple stages of ownership from the outset, particularly where bridging and term funding are being used together as part of a wider strategy rather than as isolated transactions.
Some borrowers are refinancing in phases, while others are holding assets differently once refurbishment or stabilisation has completed. In many cases, the funding strategy evolves alongside the investment itself rather than simply sitting behind it, which changes the way cases are assessed much earlier in the process.
Brokers are not just looking for broad appetite anymore; they need lenders who understand how a deal is going to operate in practice, how the borrower expects to manage it over time and where pressure might emerge once the transaction starts moving.
That does not remove the need for discipline. Specialist lending still requires clear parameters, responsible lending and a proper understanding of risk, but it also requires commercial judgement because understanding what sits behind a case has become just as important as understanding the asset itself.
When lenders, brokers and borrowers are aligned on the structure and the wider strategy early on, and understand the commercial pressures at play, that's when transactions move with more clarity.
