Bridging loans are being increasingly used by landlords to purchase buy-to-let (BTL) properties, according to the latest internal data from Shawbrook.
The bank’s research shows that in 2024, 63% of all Shawbrook’s residential bridging completions were used for purchases of BTL properties.
This trend shows no signs of changing in the first couple of months of 2025, Shawbrook said.
With property types such as houses in multiple occupation (HMOs) proving popular amongst landlords in 2024, many are making use of existing residential property stock on the market to renovate properties into these higher-yielding assets.
Daryl Norkett, director of real estate proposition at Shawbrook, said: “Despite the narrative that the buy-to-let market is in decline, our latest internal data reveals a more nuanced story.
“Property investors are being encouraged by strong underlying demand for rental accommodation and more positive forecasts, leading them to seriously consider expanding their portfolios. A BTL purchase mortgage is not the only way to expand a portfolio and many are using bridging loans to help them do just that.
“Unlike a typical buy-to-let mortgage, a bridging loan allows investors access to finance quickly and flexibly, making them ideal for those who want to move fast. With certain asset classes performing well, a bridging loan enables the landlord to both purchase and renovate the property before letting it out.
“Landlords can target lower purchase prices by finding properties in tired condition and create an initial profit margin by adding value through refurbishment or conversion. This means they can potentially take advantage of the trends we’ve been seeing within the BTL market and enjoy the higher returns that properties like HMOs can offer.”
This article is taken from Landlord Today