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Financially-hit landlords will provide a new niche for lenders – JLM

by: Rory Joseph, director and Sebastian Murphy, head of mortgage finance at JLM Mortgage Services
  • 17/05/2021
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Financially-hit landlords will provide a new niche for lenders – JLM
The buy-to-let market has been something of a disparate sector over the past few years, ploughing its own somewhat unique furrow, dancing to its own tune, or however you might want to label it.

 

To that end, landlord borrowers have been deemed not to be ‘normal’ borrowers from a lending perspective, not subject to the same stresses and issues that might be found with residential borrowers, for instance. 

We must now wonder if that has changed, given the far-reaching consequences of the pandemic.  

While some might have liked to have painted a different picture, landlords would still have worried about how they were going to pay their mortgage each month, particularly if tenants were struggling to pay rent, had been furloughed or had suffered their own income cuts. 

In that sense, they were certainly not immune from the same potential for financial difficulties, missed payments and the like. 

Reviewing this markedly different environment we find ourselves with, one wonders if buy-to-let lenders aren’t going to have to address those issues when it comes to buy-to-let borrowers? And if so, how?  

How many borrowers, for instance, will have missed payments over the last year or so? How have their existing lenders dealt with this?  

And how might lenders in the future consider these borrower applicants? Can we say they are well served in the buy-to-let lending market at present? Probably not. 

 

Area of focus

But there will undoubtedly be a niche available here and it strikes us that, in a highly competitive area, buy-to-let lenders should undoubtedly be looking at new niches to fill. 

There has been a lot of noise about the buy-to-let mortgage market in the intermediary space recently, fuelled no doubt by a number of new lenders entering the space and CHL Mortgages of course making its return.  

Many commentators have questioned whether the market was already congested, even before these latest forays and what lenders would have to do in order to secure the business levels they so obviously crave.  

For many buy-to-let lenders, finding those niches – and they do exist – will be critical to their success.  

One in four people in the UK are believed to have missed a payment of some kind since the pandemic started – how many are landlords? How many potential new landlords will come looking for finance having done exactly that? 

There is an opportunity here and, given the still challenging situation and an unknown future, being able to support these borrowers might give those lenders a competitive advantage and a borrower base to pursue.   

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