New research from Finova, one of the UK’s leading lending and savings software providers, has revealed a widening gap between broker demand and lender innovation in the specialist buy-to-let (BTL) market.
According to Finova’s New Foundations: Building the Next Era of BTL Lending report, 63% of brokers say demand for specialist BTL products has increased over the past year, with 75% seeing a notable surge in limited company BTL enquiries.
However, lenders appear to be taking a more cautious approach. Among them, 41% cited limited broker demand and 45% pointed to regulatory constraints as the main barriers to developing new products, despite clear signs of growing market appetite.
The research also highlights that 38% of lenders are being held back by technology challenges, often due to legacy systems that limit product agility and slow response times to borrower demand.
Another 36% said evolving swap rates are restricting product design, while 35% flagged margin pressures and low affordability as key barriers to innovation.
Despite 78% of lenders, and 83% of building societies, stating their appetite for innovation has grown over the past two years, only 15% are actively investing in entirely new product types.
Just 11% are prioritising improvements to faster decisioning engines, suggesting that lenders’ investment focus is not aligned with broker and borrower expectations.
Finova found that 21% of lenders are directing investment toward broker portals and communication tools, while brokers believe the biggest shortfalls lie in flexibility for complex borrowers (48%) and speed of service (43%).
Gareth Richardson, chief executive officer of Finova, said: “We’re seeing a real shift in the specialist BTL market, with brokers responding quickly to growing investor demand. However, the flip side is that many lenders are still playing catch-up.
“The gap isn’t a lack of ambition, it’s where investment is being directed.
“Many lenders are focusing on broker portals and other support tools, but the real opportunity lies in investing in the products the market is craving, like specialist BTL, and in the technology needed to accelerate service and product development.
“There’s huge potential here, and those who can adapt quickly and with confidence will be the ones leading in specialist BTL.”
Hamza Behzad, business development director at Finova, added: “The specialist BTL market is full of opportunity, fuelled by strong broker and borrower demand, particularly across limited company, green, and commercial BTL.
“Right now, lenders risk being left behind if they don’t evolve. Brokers are looking for faster, more flexible lending solutions that can meet complex borrower needs.
“The challenge for lenders is bridging that gap and the right technology is key.”
