What challenges do portfolio investors face? Here, we cover the top challenges and solutions to help you set up your portfolio for long-term success.
As your property portfolio grows, so too do the challenges when securing the right buy to let finance. Lender restrictions, regulatory changes, and cashflow pressures all increase as your portfolio expands, making expert guidance essential.
Having the right strategies in place can help you mitigate these challenges and position your portfolio for long‑term success. Below, we break down the key challenges portfolio landlords face and the solutions that can help address them.
1. Tighter Affordability Assessments and Stress Testing
One of the biggest hurdles portfolio landlords face is the rigorous affordability and stress testing criteria lenders apply:
• Affordability checks are completed across the entire portfolio, not just the subject property
• Higher stress test rates are applied
• Personal income and expenditure are assessed alongside rental income performance
For landlords with lower-yielding properties, this can often lead to constrained borrowing capabilities, even if the portfolio is profitable overall.
The solutions:
To navigate tighter affordability checks, there are several options available, such as:
• Approaching specialist lenders for more generous stress-testing
• Considering interest-only mortgage options
• Strategic refinancing that increases your affordability, such as using equity to pay off or reduce loans on higher interest rates
We’ll review your full portfolio to identify the best way to improve your affordability and unlock further borrowing for future investment.
2. A Limited Lender Pool for Complex Portfolios
As portfolios grow, many lenders have restricted criteria surrounding:
• Maximum number of properties
• Maximum debt exposure
• Complexity of ownership
These restrictions can lead to higher mortgage rate pricing, fewer product options, and application delays.
The solution:
Specialist, independent brokers with whole-of-market access sometimes have established relationships with specialist lenders that understand complex portfolios, layered ownership structures, and unusual or niche property types. By using the right broker, you can benefit from a wider and often more flexible set of options.
You might also consider a portfolio loan. These products allow you to consolidate all or some of your buy to let mortgages onto one loan, simplifying the management process and your repayments, while still at competitive rate pricing.
>> Read our complete guide to portfolio loans here
3. Impact of Regulatory Changes on Lending
Recent legislative changes, such as the Renters’ Rights Act and MEES for energy efficiency in rental properties, are reshaping how lenders assess properties and risk.
For portfolio investors, this means:
• Lenders will have a greater focus on property quality and long-term portfolio stability, influencing risk appetite
• Potentially increased operating costs to meet compliance, reducing yields and affordability when applying for future mortgages
A portfolio with increased maintenance costs or properties requiring upgrades can affect lenders’ willingness to lend to you.
The solution:
While many of these costs are unavoidable, planning and financial preparation will help you manage the cashflow. Identifying and assessing properties needing energy-efficiency upgrades now is essential so you can plan how to fund the required work. While some grants are available, you may need a remortgage to capital raise, a further advance, or a bridging loan. Keep in mind that lots of lenders offer cheaper mortgage interest rates for EPC A-C properties, which can help with cashflow.
4. Rising Costs and Tax Considerations
Section 24 mortgage interest relief restrictions pushed many landlords to restructure their borrowing through Limited Companies. However, incorporating or refinancing into an SPV brings its own challenges:
• Lenders require detailed financials and business plans
• Some lenders decline portfolios with mixed personal and company ownership
• Refinancing across multiple units simultaneously can be expensive and trigger early repayment charges
How MFB can help
We’ll liaise with your accountant or tax adviser to ensure your refinance and incorporation proceed seamlessly. By working with other professionals, we’ll also ensure that your tax decisions will be accepted by lenders when you look to secure your next mortgage, something often overlooked by accountants!
Setting your portfolio up for success
Whether you’re expanding, restructuring, or simply trying to optimise your current borrowing, specialist guidance is essential. The award-winning team at MFB can help you future-proof your portfolio and secure the right financing to set it up for success.
To get started, call us on 0345 345 6788 or submit an enquiry here.
