How specialist BTL came of age – Hendry

But if the latest Landlord Trends research tells us anything, it’s these types of investments are no longer niche and are fast becoming a core part of many landlords’ portfolio strategies.

And, of course, in this space of the market, with rising complexity comes a rising opportunity for advisers, who should be increasingly called upon by landlord borrowers seeking a financial path through. 

Our recently published Q1 2025 landlord research, conducted in partnership with Pegasus Insight, shows the underlying strength of this trend and how it is likely to develop. For example, one in five landlords now owns at least one HMO.

Among those with larger portfolios, which is defined as landlords holding 11 or more properties, that figure rises to nearly one in three of our most seasoned landlords now operating in the HMO space. This is a clear signal that landlords are increasingly looking beyond traditional single-tenancy models in favour of more diversified, multi-faceted income streams. 

On average, those landlords with HMOs now hold 3.6 such properties in their portfolios. That figure alone demonstrates HMO investment isn’t happening in isolation; it’s a deliberate strategy, pursued with scale in mind.

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Why landlords are turning to specialist BTL property 

The drivers behind this are clear.

HMOs, while requiring more upfront planning and management, offer the potential for stronger yields and reduced void risk, particularly in areas of sustained tenant demand such as university towns, commuter hubs, and urban centres, where shared living is both practical and economical. 

What’s changed in recent years, and particularly since the start of 2023, is that these specialist investments are no longer restricted to a small group of landlords with bespoke funding routes.

Specialist property types have become more accessible, thanks in no small part to the evolution of the buy-to-let (BTL) lending market itself. Lenders like ourselves offer broadening criteria, simplified application processes, and products that cater specifically to multi-tenancy arrangements, including those held within limited company structures. 

This is where another trend from the research dovetails perfectly. The move toward professionalisation, led by the rise of incorporation, continues at speed.

Over the last five years, the share of properties held in limited companies has risen from 36% to 66%, and 60% of landlords planning to purchase in the next 12 months say they will do so through a limited company. Among those who already operate with at least one incorporated property, the average portfolio size is a notable 14.6 properties, nearly three times larger than those who operate entirely in their own name. 

Specialist investment requires specialist advice 

For advisers, these two dynamics – both the rise in incorporation and the growth in specialist property investment – point to a common theme: landlords are scaling and diversifying with intent.

And they’re doing so in ways that require deeper support from their advisers. 

Understanding how to finance an HMO or MUB within a limited company structure, how to structure debt across a growing portfolio, and how to align funding with regulatory change – particularly around renters’ rights and Energy Performance Certificate (EPC) standards – is not just a value-add anymore; it’s fundamental to the adviser proposition. 

At Foundation Home Loans, we’ve worked hard to ensure our criteria and underwriting can support the evolving needs of these landlords. That includes HMOs with up to six occupants, multi-unit freehold blocks (MUFBs), and remortgage options for properties recently acquired – all within limited companies if needed. We’ve also introduced features like early remortgage availability and no minimum income requirements to remove barriers to progression for landlords who want to move quickly. 

This is a necessary response to the level of activity we continue to see. Despite a challenging regulatory backdrop and cost pressures, landlords remain remarkably resilient. Our research shows 84% are still making a profit from their lettings activity, with the average yield sitting at 6.3%. Portfolio landlords with four or more BTL mortgages, who naturally carry higher debt levels, still see 80% profitability. 

In many ways, the growth of the specialist landlord segment represents a maturity across the whole private rental sector. These landlords are not only investing in property, they’re investing in their long-term business models.

As a lender, we see it as our role to support that ambition, and we know advisers are vital in delivering the guidance and solutions that make it achievable.