Closing the innovation gap: why specialist BTL needs faster, smarter lending

The specialist buy-to-let (BTL) market is transforming at pace. What used to be a small, niche part of lending is now becoming the next growth engine of the mortgage market. Rising regulation, higher costs and shifting landlord behaviour are reshaping the market at speed - and lenders are having to rethink how they support more complex borrowers.

Brokers are feeling the impact of this change most directly. According to Finova’s latest report, New Foundations: Building the next era of buy-to-let lending, a majority of brokers report a rise in demand for specialist BTL over the past year, and 75% have seen more limited-company borrowing as landlords look for more efficient structures and greater flexibility. To meet this demand, brokers are calling for faster, more flexible solutions.

Finova’s research highlights a widening gap between what the market needs and what many lenders can currently deliver. Lenders who want to stay ahead must recognise this shift and take action - sooner, rather than later.

Appetite for innovation vs reality

Ambition from lenders is high. More than three-quarters (78%) of lenders said their appetite for innovation is stronger than a year ago, rising to 83% among building societies.

However, ambition and delivery don’t always line up. Lenders face regulatory, margin, and technological restraints, all of which hold back innovation 45% of lenders cite regulation as the biggest barrier to innovation, while 38% point to technology difficulties, with legacy systems often struggling to keep up. These outdated systems lead to bottlenecks, longer application times and slower product launches.

Perceptions of demand are also misaligned. Many lenders fear their specialist offerings won’t be met with low broker demand. Yet a majority 63% of brokers reported an increase in demand for specialist products from customers, suggesting that lenders’ concerns are misplaced. There is a clear disconnect between what borrowers want and what lenders recognise or provide with specialist buy-to-let products.

The innovation gap: what brokers need vs what lenders prioritise

Borrowers’ needs are more complex than ever, and there’s a clear innovation gap between what brokers need and what lenders are prioritising.

Brokers see an urgent need for faster, more flexible mortgage solutions for landlords. Yet, they cite flexibility for borrowers with more complex needs as the biggest area of underdelivery in the specialist buy-to-let market (48%), closely followed by speed of service (43%).

And despite widespread recognition that faster decisioning is both a competitive differentiator as well as a regulatory win, it remains a low priority, with just 11% of lenders prioritising investment in this area. Instead, lenders tend to channel their efforts into improving front-end communication, with broker portals and communication tools attracting the most investment (21%). In contrast, just 15% of lenders are focused on new product types. 

As a result, the pace of innovation is struggling to keep up with customer expectations. Closing the gap between broker expectations and lender offerings will require a more collaborative approach, where product development is guided by broker and customer needs.

Where brokers see opportunity

Even when it comes to future growth, lenders and brokers are not always on the same page. The research shows that lenders expect the most significant growth opportunities to lie in HMO/multi-unit blocks (38%), followed by limited company buy-to-let (37%) and holiday lets (36%). 

However, the picture is slightly different for brokers, who see green mortgages (33%) and holiday lets (32%) as leading opportunities[GB8] . This mismatch risks leaving product roadmaps out of step with broker demand, weakening relationships and losing market share.

One way lenders can overcome this hurdle is by using a modular origination platform, which allows lenders to pilot and scale new lines rapidly. If lenders are to remain competitive, adopting technology that enables them to become faster and more agile must be a top priority. 

The importance of technology

Technology has a critical role to play in the specialist BTL market and will be a key differentiator going forward, enabling lenders to strengthen their relationship with brokers and deliver more customer-centric experiences. It’s a factor that will decide which lenders grow in specialist BTL and which ones fall behind.

Many still rely on legacy systems that were never designed for complex borrowers. These systems may work for straightforward cases, but they break down when landlords have multiple properties, non-standard income, or company structures.

That’s why interest in modular origination platforms is rising. 36% of lenders say they’re actively considering adopting one, while 29% already have.[GB9]  These platforms sit alongside existing systems and give lenders far more flexibility. They allow new products to be launched faster and make it easier to automate routine steps while leaving space for manual review where it’s needed. And they help lenders respond to broker demand without months of internal delays.

Crucially, modular platforms allow lenders to scale specialist lines without rebuilding their entire tech stack. For lenders, this is the difference between keeping pace with the market and falling behind.

So what do lenders need to do now?

The direction of travel in the specialist BTL market is clear. Landlords are becoming more professional, and their needs are more complex, while brokers are seeing higher demand and the margins are increasingly found in specialist segments, not the traditional single-let product.

To stay ahead, lenders need to make three big shifts. First, they need to accept that specialist BTL is now mainstream. It should be a core part of product strategy, not an add-on. They also need to invest in the parts of the process that matter most to brokers, including speed, flexibility and clearer communication on complex cases. Third, they need technology that can support specialist products. That means modular tools, better workflows and platforms that can adapt to different borrower types.

The market is changing fast, and lenders who act now will be well placed to lead the next era of specialist buy-to-let. Those who move slowly risk falling behind – not because they don’t understand the opportunity, but because they can’t move quickly enough to capture it.