Bridging loans are being increasingly used by landlords to purchase buy-to-let properties, according to the latest internal data from Shawbrook.
In 2024, 63% of all Shawbrook’s residential bridging completions were used for purchases of buy-to-let properties and the lender says this trend shows "no signs of changing in the first couple of months of 2025".
The flexibility that a bridging loan gives property investors has meant that an increasing number have been utilising this financing option to help grow portfolios, with many landlords using bridging loans to refurb newly purchased properties before adding to their portfolios. With property types such as 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, commented: “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 buy-to-let 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 buy-to-let market and enjoy the higher returns that properties like HMOs can offer.
“At Shawbrook, we’ve kept investors at the heart of our offering. We can support most property types, including complex residential or commercial, and we can also offer investors funds upfront for light refurbishment works under our lending for refurbishment costs product, which can be added to bridging loan applications.”
