Irish business lender Capitalflow, which is owned by Dutch digital bank Bunq, said it is entering the buy-to-let (BTL) mortgage market as it seeks to expand its current €1.2 billion loan portfolio.
The lender estimates that there is an annual lending opportunity of about €200 million a year in this niche area of the market, where total lending amounted to €6.6 billion at the end of last year.
Capitalflow say its new BTL offering, developed with a group of leading mortgage brokers, will carry initial interest rates from 4.8 per cent for a two-year fixed product to a variable rate of 4.9 per cent. It said that it can lend to experienced individual borrowers and special purpose vehicle (SPV) companies – limited companies established solely to hold investment property.
“Our pilot programme confirmed strong demand in the switcher market. Feedback from the pilot and broker engagement highlighted frustration among landlords with slow decision-making, inflexible terms, and a lack of engagement from current lenders,” said Colum Breslin, chief commercial officer at Capitalflow. “Property investors are acutely aware of their existing terms and are [more] likely than homeowners to switch for a better deal as loans mature or rates reset, or even midterm.”
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There has been an exodus of small – often accidental – landlords from the buy-to-let market in the past decade, amid tightening regulation and tenant protection, rent controls, and restrictive tax treatment on rental income.
However, ICS Mortgages, owned by nonbank lender Dilosk, said in February that it had seen a spike in BTL loan applications early this year amid signs that professional and larger operators are stepping in following clarity on the future of rent controls, with new measures taking effect in March.
The new system has rent increases for tenancies capped in most cases nationwide – and not just rent pressure zones established under the previous regime – by inflation or a maximum cap of 2 per cent. Rent increases for new apartments commenced after last June can be as high as inflation.
In addition, landlords are now able to reset rents at the going market rate when a tenant leaves.
Capitalflow, led by chief executive Ronan Horgan, has been active in property finance since it started lending in 2017 and manages a diversified lending portfolio of approximately €1.2 billion, spanning commercial real estate, investment property, and specialist business lending. The lender was acquired by Bunq in 2021 for an undisclosed sum. Bunq was founded in 2012 by Canada-born entrepreneur Ali Niknam.
Capitalflow executives say they see structural differences in Ireland’s buy-to-let and owner-occupied lending markets. They say they expect refinancing and switching to account for a significant portion of activity, particularly as borrowers reassess lenders’ offerings when fixed rates expire, or portfolios mature.
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“This makes certainty, execution, and flexibility just as important as headline pricing,” said Breslin. “Borrowers in this market are attracted by competitive rates, flexible terms and dedicated relationship management.”
He said that there is a segment of the market that is “trapped” in the wake of the financial crisis – either by their having their loans sold to investment funds or experiencing little appetite among their existing provider to allow them to refinance or grow their portfolios.
The arrears crisis that played out across the State following the property crash was much more pronounced in the BTL segment of the market than among own-occupiers. As of December, 10 per cent of all BTL loans were at least 90 days in arrears, compared to a ratio of just 3.3 per cent of private dwelling mortgages.
