In an interview with Specialist Lending Solutions, Copland said the regulatory changes to landlord tax hitting the buy-to-let market are creating some clear water and so problems between lenders and brokers on certain cases, said Copland.
“I am aware some lenders are interpreting the client’s personal tax position differently to member brokers,” he said.
“In some respects lenders say they think the landlord is a higher rate taxpayer and so the landlord doesn’t get the benefits as much as they would if they were a lower rate taxpayer.
“I think there’s still some people feeling their way in the market and I’d offer a word of caution – the brokers must make sure they understand the landlord’s tax position and if they are suspicious or have questions they should point the landlord to the government’s amnesty site,” he added.
Given these and other regulatory changes Copland agrees that the buy-to-let market is becoming increasingly specialist, which is a good thing for brokers.
“The complexity means landlords need a third party as they won’t be able to go direct to a lender,” he continued
“The value is in a broker who understands that market and relishes the fact they want to know everything and add as much value as possible.”
Packager fees improving
In contrast, Copland is surprised the second charge and bridging markets have not moved on as much, with many brokers continuing to pass on clients with needs in these areas to packagers or master brokers.
The issue of fees charged by packagers and master brokers has caused a significant stir over the last year and while Copland agrees there is still concern, it has improved.
“We can’t dictate to directly authorised (DA) advisers which master brokers they use, but for appointed representatives it’s a bit different and we do recommend fee caps or for master brokers to justify the level of fees they are charging,” he said.
“We can’t do that with the DA market because that would be an imposition and we’re not responsible for the advice or level of fees they charge.
“But overall, I think we have seen market forces and publicity in action with a number of master brokers taking the lead in reducing fees in that market,” he added.
Indeed, Copland believes brokers hold the key to bringing fees down – advise on the products themselves.
“Rates should come down, but I would also implore brokers – these are more complex markets, show your professionalism, learn about them and advise on them,” he continued.
“It’s only when mortgage brokers start getting involved in that market will we start to see the fees squeezed on the master broker and will more direct relationships between lenders and mortgage clubs because at the moment its dominated by master brokers.”
The start of 2018 is notable for the surge of new lenders into the specialist sector, but it appears one area of significant client demand has been neglected.
“The biggest area of demand is expats brokers tell me and we still don’t have enough lenders in that market,” Copland noted.
“There’s an awful lot of people out of the country who want to buy property here. They still see it as a safe haven.
“People still want to have a foothold in the country, so expat mortgages are the one I get asked about most often,” he added.
And finally Copland urged brokers to become more involved in the specialist market to help preserve their businesses.
“As the residential market becomes more commoditised with product transfers and remortgages becoming more straightforward and digital players launching – it’s going to be a long time before we see any sort of digitalistation in the specialist market because it is so complicated.
“So I can see advice being needed in that market for a long time to come,” he concluded.