Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Buy-to-let Lending Drops as Banks Shift Focus to Major Investors

Bank lending to small and medium-sized property firms has fallen 14% in the last five years, according to new data from Karis Capital. Over the same period, lending to large property investment businesses has increased.

Karis Capital reports that the total value of loans to small and medium-sized property firms dropped to £186 billion in March, down from £216 billion in March 2021. The firm attributes this shift to banks viewing smaller property investors as higher risk, resulting in more lending being redirected to larger investment businesses. Borrowing by these larger firms rose 20% to £375 billion over the same period.

The research also highlights growth in the specialist mortgage market, with its value estimated to rise 68% to £54 billion in 2029, up from £32 billion in 2023. Karis Capital notes that alternative funding providers are increasingly stepping in to support smaller investors as traditional banks become less willing to lend.

Additionally, it has been reported that many buy-to-let landlords have been selling properties at reduced prices following the introduction of the Renters’ Rights Act in May. Karis Capital states that a significant number of property assets are currently being sold at reduced prices, but suggests that this window of opportunity may not last.

These trends are relevant for UK letting agents and inventory clerks, as changes in lending patterns and property sales could impact the rental market and property management activities.