Examining the issue in this week’s Market Watch are:
Alan Cleary, managing director at Precise Mortgages, who insists that brokers should be looking at a variety of sources to gather information about the market.
Charles Haresnape, chief executive of Aldermore Mortgages, argues that advisers need to learn to identify clients that are worth pursuing.
John Grant, property broker at BMV Investment Deals, insists that brokers are already run off their feet with buy-to-let opportunities.
Alan Cleary, managing director of Precise Mortgages
We all need to be careful that we do not have a repeat of the situation where every man and his dog decides they want to become a landlord, so the first valuable role an adviser can fulfill is to carefully assess which of their clients are suitable for taking advantage of the opportunities in the buy-to-let market.
There is a wealth of information available from numerous sources regarding the relative health of the private rental sector such as Council of Mortgage Lenders, Royal Institute of Chartered Surveyors, or the media. It makes sense to have some form of sales pack that will help educate their clients as to why now may be a good time to invest in a buy-to-let property.
Another way for advisers to help their clients is by producing a bank of practical tips and FAQs and it may be a good idea to tie-up with local professionals in order to provide clients with options on tax matters and legal requirements.
Here is another practical tip, which I haven’t seen advertised before. Buy-to-let landlords should always register their home address against the buy-to-let property with the Land Registry. That way if anyone tries to raise a mortgage against the property without their knowledge, notification will not only go to the property address but also the landlord’s home address. This makes it more difficult for fraudsters trying to pass themselves off as the owner of the property which is a type of fraud becoming more prevalent.
Charles Haresnape, chief executive of residential mortgages at Aldermore
There is a lot advisers can do to help clients appraise opportunities and identify those worth pursuing. For example, brokers can help clients understand regional variations in the buy-to-let market and advise on the most suitable regions in which to buy as well as identifying the areas worth avoiding, explaining what different areas may generate in terms of occupancy rates, rents and yields.
They can also help spot market opportunities such as student lettings or accommodation for doctors and young professionals. This type of support is invaluable if investors are new to a region and don’t have a detailed level of local knowledge.
If clients are professional landlords, brokers can offer to review their portfolio, advising how to make best use of their assets and utilise the capital tied-up in their properties. If, on the other hand, clients are individual investors then brokers can help them develop a buy-to-let strategy based on their personal circumstances and aspirations. For example, they may be older clients downsizing and considering buy-to-let as an investment opportunity, or they may be younger investors looking to develop a property portfolio for the first time.
Buy-to-let is a market which provides brokers with plenty of opportunity to utilise their expertise and demonstrate they have far more to offer than simply finding the cheapest mortgage deal.
John Grant, property broker at BMV Property Investment Deals
This question is like asking a man sentenced to death if he has any last words.
Bank Base Rate is low. Housing stock is increasingly available. Buyers, new and old seek buy-to-let homes. Ergo, mortgage advisers should be run off their feet so, the problem doesn’t seem to be with them.
Could it be less than scrupulous lenders profiteering by making a several-hundred-per cent turn over borrowing at 0.5% and lending 3.5% rates? Or, perpetually relying on soulless, faceless, computerised underwriting? Or, arbitrarily banning fee-paid property sourcing?
In 1980, there were over 200,000 advisers. Some undoubtedly needed weeding out, but today our industry has literally been decimated through a plague of mismanagement by our financial institutions and, through a less than acceptable level of competence by regulators.
No-one; lender, regulator or government seems to be listening to those who are striving to do the work, so what can advisers do? The faithful can pray for a quicker return to common sense values within lending criteria, underwriting and regulation, whilst every adviser should write, without hesitation, to their Member of Parliament to spur government into immediate and responsible action to compel sensible and moral lending.
