Despite the worry that buy to let (BTL) may be a casualty this year following the Stamp Duty and tax relief changes, the specialist lenders are looking forward to maximising the limited company buy-to-let products that they offer. The question is can they make up the predicted £10bn shortfall, down from £40bn to £30bn?
It’s a hefty figure, but the optimistic view of some lenders is that figure may only be £5bn. The big question is will the larger BTL players decide to return to this product, and can they be sure they will deliver the volumes needed if they did.
The systems and experience that were once in place for limited company buy to let are no longer there, so effectively it means starting over and this needs to be weighed up against the cost, and supply and demand. There is still uncertainty around that, and whether it will be enough to warrant rebuilding the ability to service that sector.
If the consumer desire for limited company buy to let grows and becomes the norm, the longer the delay to bring this type of product to market, the more business will be disappearing out of the door. The tricky balance is not overcooking the volume of BTL but keeping the volume at an acceptable percentage of the mainstream residential book. That figure varies from to lender to lender, and it means that some may need to increase their mainstream business to maintain the overall portfolio balance.
This will be an equal challenge, although there is a great remortgage opportunity with predicted maturities coming up in 2017. According to various data already published, for BTL alone the figure is circa £20bn and for residential circa £190bn! With figures of this size there is much to play for in the residential space, and if that shortfall is replaced with a really robust remortgage market it will change the balance, but still achieve the predicted CML figures of a £248bn market .
Sally Laker is managing director of Mortgage Intelligence Holdings