The value of lending from UK-regulated banks to small and medium-sized UK property investment businesses has fallen by 14% over the past five years, research suggests.
Loan values have dropped from £216 billion in March 2021 to £186billion as of the end of March 2026.
Real estate brand Karis Capital, which conducted the research, said the shift in lending away from small investors is because banks’ lending models often rate smaller property investors as higher risk, limiting their access to finance. These include high-street, challenger and boutique banks.
Much of that lending has been redirected to large property investment businesses, whose borrowing from banks rose 20% to £375 billion over the same period.
BUYING OPPORTUNITIES
The decline in lending comes just as falling property prices have created attractive buying opportunities, according to Karis Capital.
Nicholas Christofi, chief executive of of Karis Capital, says: “Smaller property investors should look beyond banks to take advantage of falling property prices. The market is currently offering very attractive buying opportunities but many smaller property investors are finding their usual lenders are less willing to lend.”
“Non-bank lenders are often happier to lend in smaller lot sizes and are much more open to bespoke finance deals.”
“Our view is that if you want to get the most competitive finance then you need to look at all the lenders and not just the bigger banks.”
“Many banks prioritise larger lending deals and they see that as a more efficient way of deploying their capital.”
ALTERNATIVE OPPORTUNITIES
Christofi says a boom in the UK bridging market and specialist mortgage market shows that alternative funding providers are willing to step in for smaller investors.
It comes as it has been reported that many UK buy-to-let landlords have been selling properties at reduced prices following the introduction of the Renters’ Rights Act.
Christofi adds: “Specific events in the property market mean a significant number of property assets are currently being sold at reduced prices. That window of opportunity is unlikely to remain open indefinitely.”
