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‘Lenders are heading for trouble with five-year buy-to-let deals’ – Platform Manchester Supper Club

  • 18/12/2018
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‘Lenders are heading for trouble with five-year buy-to-let deals’ – Platform Manchester Supper Club
The Manchester Platform Supper Club took place in the heart of the city at the ultra chic MalMaison hotel.


The discussion kicked off with guests giving an update on the local market.

Brokers at the supper club generally reported that business had been good, despite ongoing headlines about Brexit and a slowdown in house prices.

One participant said: “I’ve had a record month. It’s been a mix – remortgages, purchase, product transfer, it’s been great.

“When you speak to local agents, the suggestion is that there’s trouble but I’m not seeing it.”

Another guest added: “What I’ve lost in purchases I’ve gained in remortgages.”

Participants had mixed predictions about the looming impact of Brexit.

One adviser said: “Obviously you do hear a lot of people discussing it, but nervousness doesn’t seem to be one of the words that is used.

“If you look at lenders’ relaxation of criteria, why would you do that if you’re nervous about the market?”


Buy to let trouble brewing?

There was a broader range of experiences in the buy-to-let market among the supper club participants.

Some said they had “barely done” any landlord purchases, whereas one participant said around half their business was still in this area – generally from professional investors with big portfolios.

They added: “Everyone is lending. I’d say the market is really buoyant.

“You’re saying you’re not busy on buy-to-let, you should be. There’s a housing shortage. People need to live somewhere. Not everyone can buy.”

Some guests worried that stress rates and the subsequent increase in five-year deals could provide problems for the industry further down the line.

One participant said: “The lenders are going to get themselves into a lot of trouble.

“In a few years to come, I think the biggest clients are going to come back and say ‘You forced me into that five-year rate, you forced me down that road’.  It’s not going to be good for lenders.”

Not everyone agreed.

One adviser said: “The Prudential Regulation Authority (PRA) have set the rules and regulations and the lenders are adhering to them.”

Another added: “Lenders would also say they didn’t force anybody down that route, they offer the product at that stress rate and then the broker and the customer went that way. No lender says you’ve got to go down this route.”


Future mis-selling scandals

There were also some concerns among guests about future mis-selling scandals, with Help to Buy flagged and interest-only both raised as potential issues for the future.

But it was suggested there are more systems and checks in place to help protect brokers from future claims.

One guest said: “Basically the amount of declarations we’re now getting them to sign just to make sure that there’s no complaint. The more signatures you’ve got, the better protection you have.”

Another participant added: “We’ve relied on suitability letters but we didn’t feel they were strong enough to fight off a claim. We’re introducing some more disclaimers.”


Product transfers valued

Product transfers have been a much-welcomed and growing area of business for many of the guests.

The deals are less stressful because you know the client won’t end up going on to a standard variable rate (SVR), suggested one guest.

Another added: “And you’re earning money out of it. There’s been times over the past 10 or 12 years where you sent a client back to their existing lender because that’s the best deal. And you’ve done all the work but you’re earned no money out of it.”

Guests denied brokers were taking the easy option with product transfers.

One participant said: “You’ve got to generate sourcing, so your product transfer might be the 20th deal down, and you’ve got all these remortgages above it.

“So how do you justify it? You can’t.”

Another said: “There’s an argument where you might do a product transfer with a client rather than move them to another lender, so that they’re not going through all that pain.”

Brokers at the dinner said they generally kept on top of clients and repeat business with text documents and phone calls.

Some advisers contacted clients as much as six months in advance.

One participant said: “You don’t necessarily have to do the deal, you’re just touching base with them. Because the lenders will write to them six months in advance.”


Technology not a concern

The conversation then flowed on to technology and automated-advice.

Overall not many of the guests felt concerned about developments in this area, especially in the near future.

One participant said: “You’ve got like the kids that are coming up now. You can’t even get a conversation out of them, can you? In 10 or 15 years’ time, maybe, but in the short term, no.”

Technology isn’t replacing human administrative support either, according to the guests.

One participant said: “I think generally there’s more reliance on admin, because it frees up the adviser to do more business.

“The advisers I see have three or four, which they might have started off with one.”


How much do you charge?

The discussion ended with guests disclosing the client fees they charge.

Prices were from £295 up to £995 – as well as percentage-based charges of up to 2%.

However, fees were often dependent upon a number of variables.

Some advisers charged more for buy to let than residential – for others it depended on whether it was a new or existing client, or whether it was a product transfer or remortgage.

One participant said: “Where we buy leads in and then it’s more focus on adverse, it’s £995.”

Another guest said: “I know it sounds bad but it depends on the loan amount.

“If it’s a small loan, then I’ll probably charge them something.

“But if it’s £5oo,000 loan, I’ll tell them all day, I’ll send you a bottle of whatever on completion if it’s a big loan.”

There were also differences in when brokers took their fees, with some at completion and others at the outset.

One guest said: “I take mine on agreement now. If they pull out, you could have done two days’ work.”

Another said: “I think the thing is when I ask brokers what it actually costs you to do a case, it’s interesting how many people don’t actually know.”

Thank you to all our guests and Platform for an entertaining evening.



Peter Atherton – Ashtons Financial Services
Suraj Dass – Jordan Fishwick
Stephen Edge – Peak Finance
Neil Mellor – Mellor Financial Services
Sharif Muhashash – Green Door Mortgages
Anthony Murphy – Beneficial Mortgages
Ross Patterson – Sphere Financial Services
Colin Prunty – Ashtons Financial Services
Alan Sheeran – Your Move
Lynn Wallwork – Real Financial Services



Lawrence Farrall – Platform
Louise Gray – Platform
Beverley Haddrell – Platform
Brad Rhodes – Platform


Mortgage Solutions

Katy Bryant – Mortgage Solutions
Lana Clements – Mortgage Solutions
Danielle Moore – Mortgage Solutions

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