Amid this evolution we’re experiencing a boom in specialist lending as more complex cases and regulatory hurdles emerge.
Larger high-street lenders who are well equipped to handle vanilla cases are often unable to address needs outside of the norm. Instead, these borrowers rely on brokers for specialist advice to direct them to an appropriate lender who can meet their specific needs.
Working in tandem with specialist lenders, brokers are key to the constant development and refinement of these specialist products designed to meet these ever-changing requirements.
In buy to let, the mortgage tax changes introduced in April have had a ripple effect across the market.
With fewer tax incentives, we anticipate a rise in professionalisation of the sector as dinner party landlords move towards other forms of investment.
Those looking to mitigate the effect of the tax changes are adopting various measures where legally possible, including transferring properties to a partner on a lower tax band, moving to a limited company structure, or moving parts of their portfolio to commercial or semi-commercial.
While various courses of action might be available, brokers should be prepared to provide guidance on the options that best suit each client’s circumstances as there is certainly no one-size-fits-all solution.
Another knock-on effect of the tax changes is that 36% of landlords are planning to reduce costs, or have already done so.
With record-low interest rates, it’s unsurprising that 10% are looking to take advantage of the opportunity to reduce mortgage costs, driving remortgaging activity.
Looking ahead to September, the second tranche of the Prudential Regulation Authority’s new underwriting standards will come into force, changing the way portfolio landlords and SMEs are assessed when accessing finance.
This offers brokers an opportunity to get on the front foot in informing and educating clients proactively ahead of implementation as a key service.
In an increasingly specialised market, the broker’s role will develop to support clients in navigating a rapidly changing market, and working in partnership with specialist lenders will be key to meeting their needs.
Brokers have triumphed over multiple challenges over the decades, and we can be certain that broker-lender relationships will be crucial to the industry weathering the storm against future changes.