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Overcoming the Finance Hurdle in UK Property Investor-Led Schemes

The allure of property investment in the UK has always been strong. From the historic stability of the market to the potential for significant returns, real estate has remained a popular asset class. However, in recent years, a growing challenge has emerged for investors looking to capitalise on opportunities within investor-led schemes. The UK’s investment […]

by | Mar 03 2024

The allure of property investment in the UK has always been strong. From the historic stability of the market to the potential for significant returns, real estate has remained a popular asset class. However, in recent years, a growing challenge has emerged for investors looking to capitalise on opportunities within investor-led schemes.

The UK’s investment landscape is evolving, and high-street lenders are adjusting. This adaptation is particularly palpable regarding financing properties within schemes where most units are planned as rental units. While this shift in lending practices is meant to address systemic risks, it’s also causing headaches for investors who are now navigating a labyrinth of regulations and requirements.

In this comprehensive post, we’ll dissect this challenge, offer insights into why this dynamic is shifting, and provide actionable strategies for property investors looking to secure the financing they need.

Understanding the Shift in Lending Behaviour

Regulatory changes, market trends, and the collective memory of past financial crises continuously shape the investment environment. Lenders are particularly sensitive to risk and are guided by various regulations designed to protect themselves and the more significant economic system.

One such regulation that has steered lending behaviour, known as the ‘Prudential Regulation Authority’s’ (PRA) buy-to-let underwriting standards, was introduced in 2016 and updated after that. The standards focus on assessing the affordability of mortgage commitments and the impact of the macroeconomic environment on the property investment sector. In a nutshell, the PRA’s guidelines directly respond to concerns about the stability of the buy-to-let mortgage market and the potential impact on the broader economy.

Why Are Developers Moving Towards Rental-Heavy Schemes?

The appeal of rental-heavy property schemes for developers is rooted in the housing market’s current state. Soaring house prices, changing demographics, and the growing popularity of renting over home ownership have made rental units a hot commodity. As a result, developers are increasingly orienting their projects to cater to this demand, emphasising building out properties that are predominantly or entirely meant for rental purposes.

However, while this shift benefits the rental market, it’s created a novel predicament for investors seeking financing.

The Investor’s Lament: Securing Mortgages in Schemes Without Owner-Occupiers

High street lenders have long been the go-to source for property financing and have tightened their criteria. They have become increasingly unwilling to provide mortgages for buildings without owner-occupier presence. Their rationale stems from a risk-averse approach mandated by regulations. Put, schemes without owner-occupiers are considered a higher risk, translating to a less favourable proposition for lenders.

This change in lending appetite has made it more challenging for individual investors, especially those with limited company structures, to finance projects within such schemes. The domino effect of this shift has not only dampened the spirits of budding investors but also impacted the liquidity and dynamism of the property market.

The Catch-22 for Limited Company Purchases

Limited company purchases, a popular vehicle for property investment in the UK, have been particularly affected. The paradox here is evident; by being investor-focused, properties purchased through limited companies are often the ones that high street lenders are hesitant to finance. The resulting difficulty has created a situation where investors who adopt a prudent approach to investment, such as utilising limited company structures, face barriers that are difficult to surmount within the conventional lending ecosystem.

Strategies to Navigate the New Norm

In the face of these hurdles, property investors must adapt their strategies to identify and secure the financing needed for their projects. Here, we present actionable tactics to circumvent the challenges and continue to grow and thrive within the UK’s evolving property investment landscape.

Diversifying Your Lending Portfolio

One of the most effective strategies is to diversify your sources of financing. This may involve looking beyond the traditional high street lenders to specialist banks and alternative finance providers. These entities may have products and services better suited to investor-led schemes’ specific nuances and risks.

Building a Stronger Financial Profile

Amidst tightening regulations, lenders place a premium on applicants with robust financial profiles. Building and maintaining a solid credit history, minimising debts, and showcasing a sound financial standing can significantly enhance your eligibility for a mortgage. Keeping the business in good financial health is equally imperative for limited company purchases.

Partnering with Brokers and Advisors

The expertise of experienced mortgage brokers and financial advisors can be invaluable. Brokers specialising in property financing have deep industry knowledge and networks that extend to lenders more amenable to investor-led propositions. Engaging with these professionals can help you access tailored advice and support throughout the financing process.

Advocating for Reform and Industry Dialogue

In navigating this landscape, it’s essential to adapt individually and advocate for systemic change. This may involve engaging with industry bodies, regulators, and even high street lenders to foster dialogue and propose reforms that balance risk management with the need to support a thriving investment market.

Staying Informed and Proactive

The property market and financing landscape are in a state of flux. Staying informed about regulatory updates, market dynamics, and emerging financing options is crucial. Being proactive in your approach by networking, attending industry events, and keeping abreast of current trends will position you to make informed decisions and act swiftly to secure financing when opportunities arise.


The challenges in securing finance for investor-led property schemes represent a significant hurdle for investors in the UK’s dynamic property market. However, these obstacles can be navigated with a strategic approach, a willingness to adapt, and a continuous pursuit of knowledge and allies.

Looking ahead, investors need to remain agile, creative, and persistent in their efforts to secure the funding that will allow them to participate in and enrich the UK’s property investment landscape. Through collaboration, advocacy, and a commitment to financial prudence, investors can turn this challenge into an opportunity to redefine and strengthen their investment strategies.

For those passionate about property investment in the UK, the road may be more complex, but the horizons of opportunity remain vast. With a blend of tenacity, knowledge, and strategic thinking, aspiring and seasoned investors alike can continue to forge paths to success within this evolving and resilient market.

Are you considering acquiring an investor-led investment or struggling to secure finance on one you have already exchanged on?  Contact us for expert guidance. Our experienced team of mortgage specialists is here to assist you every step of the way. Whether you’re a first-time landlord, portfolio landlord or looking to refinance, then we can place you with the right experts to provide personalized advice tailored to your needs.

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