Judging by some of the portfolio landlord policies that have been announced – some very late in the day – it seems quite clear that the appetite to lend in this part of the buy-to-let market isn’t as strong across the board, indeed, we might already be seeing just how little these lenders want on their plates.
Given this, one area that might have been overlooked is adviser’s own appetite to provide their services to portfolio landlords.
Undoubtedly, with some notable exceptions, the complexity of this type of advice has grown and the work and data requirements of some lenders are way beyond what they used to be. Understandably, some advisers might well be weighing this up – plus the fact it looks unlikely they’ll get paid for more work – and wonder whether they really want to be advising portfolio landlords in the future.
More portfolio landlords
It would however be a shame to see advisers leaving this part of the market for a number of reasons. First up, of course, is the movements we’re seeing within the buy-to-let market itself. As we all know the government’s focus on individual landlords has been moving homes from the private rental sector into the hands of owner-occupiers, and if we are to judge the success of this by a fall in the number of purchases individual landlords are now making, then it’s job done.
However, a fall away in individual or amateur landlords does not make the aspirations and ambitions of portfolio and professional landlords any less. Indeed, what we are likely to see is a move towards professionalism with more landlords utilising limited companies and, where they can, adding to portfolios.
In that sense, the number of portfolio landlords might well grow – especially as newly-defined by the Prudential Regulation Authority (PRA). And in a more complex marketplace, their need for mortgage advice is going to be greater than ever before.
In a nutshell, for those who want to continue engaging with portfolio landlords, the demand will still be there.
Lenders cut their cloth
And then we come to the sector itself. Lenders are engaging with the rules differently. While some put in place very different criteria changes and the like, there are others who are showing no changes.
Greater data or documentation requirements will be a fact of life, but not for all, and there is a brigade of specialists who want to continue supporting advisers and have a growing appetite to lend.
We are seeing changes to the buy-to-let landscape but these are not wholesale and we are certainly not seeing something of a post-credit crunch situation where appetite to lend is washed away to next to nothing.
Clearly, some lenders are cutting their cloth accordingly, and deciding that the sector does not fit their systems or their ability to secure margin, but for others portfolio landlords are in demand and they are a bread and butter aspect of their lending proposition.
So, when advisers weigh up their continuing involvement in this sector, they should know that greater work requirements, a harder lending decision to secure, and much greater complexity, are not industry-wide.
Indeed, if they can get to grips with the sector, embrace the specialism they have, and work their way through any teething problems, they should have a burgeoning client group to access and one that is going to be greatly in need of advice.
Those that stick the course should reap a reward which will greatly benefit their business.