In a buy-to-let market shaped by higher interest rates, tighter affordability, and a complex regulatory landscape, landlord borrowers could be under significant pressure, particularly those operating via limited companies.
At Hinckley & Rugby Building Society, we believe lenders must offer practical solutions tailored to today’s environment, and our top-slicing approach for incorporated landlords is a direct response to that need.
Landlords coming to the end of historically low-rate deals are facing stark new realities. A significant number of these borrowers, especially those who locked into deals three or five years ago, are now encountering a vastly different market. Mortgage rates are higher, rental income has tended to grow but may not always have kept pace with the rate increases, and meeting affordability remains tough.
While landlords operating as individuals have sometimes benefited from more flexible assessment criteria, limited company borrowers often find themselves excluded from the same options - despite running what are essentially commercial enterprises. This is where top-slicing makes a crucial difference.
At the tail-end of last year we launched a limited company five-year fixed-rate product with top-slicing, to address this exact challenge. With a maximum LTV of 70% and a 1% completion fee, it offers competitive terms and is currently priced at 5.79%.
But its real strength lies in how we assess affordability: not solely on the rental income, which may no longer suffice in the current market, but on a landlord’s broader disposable income and wider financial footprint. This includes earnings from other properties, business income, and investment returns. It’s a more holistic view, and one that reflects the way many portfolio landlords actually operate.
The wider lending community is beginning to understand that affordability in 2025 looks very different to affordability in previous years but that demand and appetite remains strong. According to Twenty7tec’s latest data, buy-to-let mortgage searches have increased by 26.1% over the past month, with searches by limited company landlords up 33.8%.
That’s a significant signal that this market segment is not only active but growing in complexity. The same report shows that nearly one in every five mortgage searches is now for a buy-to-let product - a strong indication that advisers need to be ready to navigate this shifting landscape.
From an adviser’s point of view, top-slicing is not just a useful tool, it can offer a real solution for certain landlord borrowers. If affordability falls short on rental income alone, advisers need to be able to direct their landlord clients towards lenders who can consider wider financial circumstances.
The capacity to use surplus personal income to offset rental shortfalls can mean the difference between a successful refinance or a failed application, particularly for borrowers with larger portfolios or those restructuring for tax-efficiency via incorporation.
Let’s not forget, this market shift also coincides with an uptick in remortgage activity. Many landlords are actively seeking ways to remain in the market without compromising their financial position. With inflation showing signs of retreat and the Bank of England expected to reduce interest rates in the coming weeks, more landlords may be looking to switch or restructure existing arrangements. In this context, the ability to offer a lending solution that supports both the landlord’s goals and the adviser’s recommendations is essential.
It’s also worth acknowledging the human element. Landlords are individuals too, with their own financial ambitions and pressures. They’re trying to manage rising costs, navigate tax reforms, and plan for the future, all while ensuring their properties remain profitable. A top-slicing approach recognises this complexity. It’s not about stretching affordability beyond what’s safe; it’s about reflecting the real-world financial position of landlords today.
Of course, as a mutual, our role is not only to lend responsibly, but to help provide access to property finance in ways that work for both borrower and broker. That includes ensuring we’re offering products that reflect today’s challenges, whether that’s through flexible underwriting, digital conveyancing platforms like PEXA, or innovative products like top-slicing buy-to-lets for limited companies.
Ultimately, advisers need options. They need lenders who can look beyond traditional income streams and who can underwrite with nuance. With top-slicing, we’re enabling exactly that, providing a bridge where rental income alone can’t stretch far enough, and making it possible for landlords to continue building and sustaining their property businesses.
