This has led to our business development managers (BDMs) frequently being asked questions such as “What’s the difference between an Airbnb and serviced accommodation?” or “What’s the difference between a holiday let and a short-term let?”

While these appear to be pretty straightforward questions on paper, from a lending perspective, we often have differing approaches in terms of risk, policy and criteria for such property types. So, you can fully understand why there may be some lingering confusion within the intermediary community.

Getting into the details of short-term and holiday lets 

Speaking more generally, short-term lets and holiday lets provide landlords with flexibility, allowing them to let out their properties on a stopgap basis, without the need for an Assured Shorthold Tenancy. These can be more ‘standard’ short-term lets where the property is occupied by travelling businesspeople, or those in need of a temporary home. 

Alternatively, holiday lets have become increasingly popular in the wake of the ‘staycation’ phenomenon, especially due to the continued growth of online platforms that are making it easier for property owners and managers to advertise their rooms or properties to potential guests both domestically and internationally.

With this in mind, it was interesting to see the Office for National Statistics (ONS) explore activity levels through three major online platforms, namely Airbnb, Booking.com and the Expedia Group. 

The report showed that, from July to September 2023, there were nearly 2.8 million stays in short-term lets booked through these platforms in the UK. This totalled nearly 28.9 million guest nights with an average of 313,879 guest nights each day.

In the UK, domestic visitors were suggested to have made up 63.6% of guest nights (18.4 million) compared with 36.4% by international visitors (10.5 million); Wales was the UK country with the highest proportion of domestic guest nights (85.3%). 

The local administrative units (LAUs) in the UK with the highest number of total guest nights in Q3 2023 were Cornwall (1,586,060), City of Edinburgh (1,157,180) and Westminster (871,900). The LAUs with the highest share of guest nights for each UK country were Cornwall (7.3% of England), City of Edinburgh (26.9% of Scotland), Gwynedd (19.1% of Wales), and Belfast (29.2% of Northern Ireland). 

In addition, the most popular LAUs for domestic guest nights were Cornwall (1,311,380), Gwynedd (365,750), and City of Edinburgh (345,000), whereas the most popular LAUs for international guest nights were City of Edinburgh (812,190), Westminster (757,350), and Kensington and Chelsea (389,720). 

Meeting the growing demand and interest

These represent some highly significant figures and are amplifying the emphasis on lenders to provide their intermediary partners with a wealth of options for landlords who may be looking towards a variety of property types, all with differing specifications and individual complexities.

Holiday lets and short-term lets form part of the core range from BTL by Foundation, but in addition to this, the growing demand for these properties from a wider range of borrower types has led us to launch a new suite of products from our new ‘Solutions by Foundation’ brand.

For example, we can now consider these short-term and holiday lets for UK landlords with multiple properties under one title – a scenario common when farm cottages have been converted or an individual property that has been divided into short-term lets or holiday let flats.

These specialist properties are an area of the private rented sector (PRS) that will continue to generate interest, questions and enquiries in the wake of sustained demand and the growth of online platforms. 

I’m sure there’s no business owner out there that hasn’t been burnt by this situation. The trouble is, we let the past predict the future. Just because it has happened before is not justification for you doing the lion’s share of the workload and business written.

Let’s address two issues that stop mortgage businesses from reaching their true potential. 

1) If I write the business myself, the company gets 100% of the income. 

Yes, that’s definitely a true statement. I’m not disagreeing with the blatantly obvious, but you’re swapping time for money. There’s no scalability, and you’ll certainly hit a ceiling at some point. If working flat-out seeing clients while a team of administrators hold things together is your business plan, then you’ll do very well.

I know people in this situation with three administrators that are writing £400,000 per year. They often look at least 10 years older than they are, but the model works. It has no saleable value, but banking at that level should mean you don’t need a lump-sum sale figure to see you into your retirement; instead, you can simply become a referrer, sending your clients to an alternative broker for 25% of the income. 

2) If I pass leads to a broker, they don’t convert like I do, and if they’re any good, they’ll leave and take their clients with them. 

Certainly a possibility but definitely not guaranteed, and unless you build some level of trust in your team, you’ll never achieve full potential. 

So, how do we start building a company where we maximise both brand and broker loyalty?

The two are well-linked, so are more easily achieved than you may expect. 

Providing brokers with high-quality, high-converting leads is certainly a great starting point, but they are never going to leave while they need leads. No, they’re most likely to leave once they have their own client bank. So, high-quality leads are the reason brokers join but not requiring future leads is a reason they will leave. That’s assuming you’ve created a great working environment. 

So, how do we build both brand and broker loyalty? 

The broker, in their natural habitat, is quite a lazy breed. The more they can get off their plate with someone else doing it for them, the happier they are.

Admin booking their appointments, happy days. Admin submitting their mortgage, heaven. Admin covering all case progression, perfect. This removal of all aspects of the work not requiring a qualified broker to complete is the perfect situation for two reasons. 

1) The broker has more time to meet with clients. 

2) The client’s relationship starts building with the company. 

Imagine this easily achievable scenario: the administrator calls the client to book the appointment. The administrator calls the client after any meetings with the broker to check customer satisfaction and the like. When the case is submitted, the administrator calls the customer and states that they are the first point of contact for any queries. 

This relationship continues during the case to completion and beyond. Any newsletters, updates or calls are all handled by the administrator. 

The adviser won’t complain, as they are now writing more and doing less admin. At least they won’t until they think about leaving, then they realise they don’t have such a solid relationship with ‘their’ clients, and they don’t fancy taking responsibility for the administration process they’re now out of touch with.

As a result, they realise they need to build on what they have as the alternative is now not quite as rosy. 

You soon reach a position where the client calls and asks for the administrator or their ‘client care rep’ rather than the adviser when making any sort of enquiry.

The adviser settles into the relatively easy life of being a mortgage seller rather than a part-time administrator and you, as the business owner, now have more time for yourself while earning more income as a company and with higher client satisfaction scores.

Utopia has been achieved; you now have brand and broker loyalty working in your favour. 

One area where we see a growing need for greater support is foreign nationals. The UK heavily relies on skilled workers to fill acute labour shortages, particularly in sectors like healthcare and IT. 

Last year, the government issued over 230,000 worker visas, up by 150% since before the pandemic.

Earlier this month, the government increased the minimum salary threshold from £26,200 to £38,700, in an attempt to curb the flow of migration to the UK. But the need for skilled foreign workers remains strong. Indeed, the Home Office projects that over half a million ‘in-country’ visas will be granted to foreign skilled workers by 2028/29. 

Foreign nationals seeking mortgages 

Criteria searches on broker platforms strongly suggest that there is a growing appetite for mortgage solutions to serve this segment of the market. They also suggest a significant unmet demand, given brokers frequently resort to these tools for complex cases they find challenging to resolve.

The fact is, too many foreign nationals currently face significant barriers to obtaining a mortgage and settling in the UK as their home away from home. Traditional lending criteria often exclude them from mortgages currently available, requiring minimum residency periods and income thresholds that may not align with their circumstances.

The base criteria that foreign nationals must currently meet include minimum UK residency requirements of one or two years and a minimum income threshold of £50,000. Added to this are capped loan-to-value (LTV) rates, often set at 75%, making it challenging for new arrivals to meet these demands. 

As a result, many new arrivals find themselves unable to achieve their homeownership ambitions, despite their aspirations to settle and integrate into British society. 

Innovative lending solutions 

We believe it is the duty of lenders, especially mutuals, to look for ways to break down these barriers to homeownership and look for more innovative ways to help more people secure a mortgage. That does not mean watering down affordability assessments or creating sub-prime products.

Far from it. But it does mean finding a way around restrictive criteria designed to protect lenders that are creating these segments of under-served borrowers. 

Through collaboration and innovation, we can build a more inclusive and accessible mortgage ecosystem that will allow more people to call the UK their home. 

At first, a mortgage network might roll out the red carpet and make various promises. So, naturally, brokers often aren’t thinking about what will happen if they decide to leave one day or if the relationship sours. 

However, it’s important for brokers to think not just about the present, but also about the worst-case scenario if they find they need to leave the network one day. They should also think carefully about what the network they are considering joining can do to help with a smooth transition. 

All too often, the conditions and restrictions placed on brokers if they want to leave a network can act as a barrier to them joining a new one, and problems only come to light when brokers look to move. 

A mortgage network’s terms and conditions 

This might be because brokers just skimmed over the small print or didn’t fully absorb what the conditions of the contract fully meant for their business – or what they would mean if there came a day when they wanted to move. 

Even if advisers were aware of the terms and conditions, when all seems well, brokers might like to think optimistically and believe they will never leave – much like a celebrity marriage without a prenup.

One area of frustration we see for brokers looking to move across to our network is what will happen to their commission payments once they make the switch. If an appointed representative (AR) resigns, it’s common for some networks to withhold brokers’ commission payments for a period of time – sometimes up to six months. While this might be to protect against clawbacks, it can make life very difficult for brokers.

How mortgage networks can assist brokers 

There are a number of things a new network can do to help, though.

The first thing a network can do is novate on-risk policies and indemnified commission across, so we take the liability. 

Where there are loaded premiums, however, brokers need to be particularly cautious about the terms of their initial contract. There may be some networks who agree to novate the liability, but if there are clawbacks, the broker repays even the network’s share. 

We can, however, guarantee the old network that, if anything does come off the books, we will make sure that we pay the network first. Sometimes that works out well, and they are happy with that, as they don’t have to chase brokers. 

The other thing we can do is help the broker with cash flow – this can often be the most important thing for an adviser when moving networks. Like a bank account, we can provide cash flow similar to an overdraft facility – which is very much a bespoke deal.

There are other considerations for brokers as well, such as what their contract states about their professional indemnity (PI) insurance and what happens, for example, if any future complaints are made against the adviser or whether there is a requirement for run-off cover. 

Whether it’s making the switch from directly authorised (DA) to AR or from one network to a rival, concerns over contract issues shouldn’t stop advisers moving networks if they are unhappy.

One size doesn’t fit all 

We see mortgage brokers switch networks for various reasons. They may be looking for a network that can help them expand into new products or financial planning, or they may need greater compliance support. Alternatively, they might be looking to grow their business by better utilising technology or by improving their marketing strategies. 

Or they might be thinking further ahead to when they retire and looking for a network that can help them with succession planning. 

What we often also see is brokers moving from larger networks to smaller ones for a more personal service and a higher level of support. They might be looking for a better sense of belonging or to have a network that they feel better understands their goals and aspirations.

As with all separation processes, it can be rocky or smooth, but a new network can help with this. If brokers do want to leave their network, they shouldn’t let fears over existing contracts stop them from breaking free. 

Click here to view the video of the Intermediary Mortgage Lenders Association’s (IMLA’s) Inclusivity and Diversity Group session on dyslexia, facilitated by Nationwide Building Society and The Mortgage Mum.

Dyslexia is primarily thought of as a learning difficulty affecting reading and writing, but it takes many different forms.

People with dyslexia may find it hard to match letters to sounds, to remember how to spell words, or they may even see letters moving around when they’re reading. Some may have trouble telling left from right. Remembering lots of instructions can be particularly hard. Some may need more time to remember the right word, and some may struggle to organise themselves. 

But seeing things differently can be very positive – people with dyslexia may be very good at identifying patterns and solving problems, imagining objects rotating in their head, telling stories, making people laugh, taking things apart, understanding how they work, understanding how to put them together again, inventing, making things, and seeing the bigger picture, for example. 

Many people feel uncomfortable identifying as dyslexic for fear they will be judged as less capable than others, when in reality many of the perceived ‘weaknesses’ dyslexics experience can be turned into strengths with the right support. And there are plenty of examples of famous dyslexics, from Bill Gates to Agatha Christie, Albert Einstein to Leonardo da Vinci, to name but a few, who are testament to what dyslexic people can achieve. 

Nicola Goldie, head of strategic partnerships and growth at Aldermore and co-deputy chair of the Intermediary Mortgage Lenders Association (IMLA), said: “Dyslexia is a condition affecting 10% of the population or 700 million people worldwide, yet it is not very well-understood. As mortgage lenders, there are simple yet effective changes we can make to help our dyslexic colleagues and broker partners function more effectively, and assist them in turning the challenges they face into strengths.” 

My story: Lydia Witney, senior business development adviser, Nationwide

“I was diagnosed with dyslexia at a very young age at school, because I was slower to pick things up than my classmates. 

“I chose not to disclose my dyslexia when I interviewed for a job in the mortgage collections and recoveries department at Nationwide in 2018. My previous job was not in financial services and did not involve numbers. I knew that, coming into Nationwide, I would need to deal with numbers, such as reading out large sums to customers over the phone. I am very dedicated and knew I could work on my numeracy skills to get it right. But I didn’t know how educated my interviewer might be around dyslexia and didn’t want to tell them in case they thought I couldn’t do the job. 

“During training, my manager picked up on some of the challenges I face, which she also experiences as a dyslexic person. She pulled me aside and told me about her challenges and her journey. Naturally, I then opened up about the problems I was having. Nationwide put in measures to help (see below), and introduced me to their Dyslexia + support group, which has more than 200 members. My confidence grew, and when I saw a job come up in the intermediary relations team, I applied for it. I was happy to disclose my dyslexia this time. In the interview, I laid it out clearly: here are my challenges, this is what I can do about them and here are the other things I can bring to the role. 

“I have since been promoted, am very happy in my job and feel I am doing well. I’m also in the process of completing a Level 2 apprenticeship in Leadership. If you’d told me five years ago I’d be back in education, I would have laughed. All the way through school I struggled learning new things, and shied away from doing A Levels and going to university. Nationwide helped me grow in confidence and now I’m trying to see my dyslexia as a strength and use it to my advantage. I have started talking about and learning about my dyslexia, and now I’m keen to educate others and help spread awareness.” 

Lydia’s challenges

• I spell erratically, so I rely on spellcheck, and ask people to ignore spelling mistakes in my emails. 
• I mix up my words without noticing. For example, I recently tried to arrange a meeting for next Wednesday but kept saying next Tuesday – in my head I was saying Wednesday, but kept saying Tuesday. 
• I get sensations of mental overload. If I am very busy and I’m in a noisy environment, I can feel overwhelmed and just switch off – I need to go away and come back with a fresh head. 
• I can forget whole conversations and important dates – wholly unintentionally. I can completely forget what I’ve been asked. 

Lydia’s coping mechanisms 

• In an interview, I will explain that I need to write the interviewer’s questions down, so I can refer back to them as I’m answering. 
• I am completely open with my manager, and will have a call with her if, for example, I receive a really important email. I will tell her what I have taken away from the email and check whether there is anything else I need to know. 
• I use lots of visual prompts and colour co-ordinate absolutely everything – my diary is so colourful it could make you feel sick. 

What can you do as an employer? 

1. Give clear and precise information (ideally bullet points, if not verbal) and check for understanding.
2. Create a working environment with no distractions or provide access to a quiet space – helps with mental overload issue. 
3. Provide suitable technology, such as online calendars and organisers, and digital recorders. 
4. Build planning time into each day, which lets the employee manage their time and feel in control of their workload. 
5. Provide audio or video versions of job ads as well as written ones. 
6. Keep interview questions brief. 
7. Provide practical hands-on training, rather than written instructions. 
8. Install dyslexia-friendly fonts on computers and set them as default in word processing software. 
9. Print information on coloured backgrounds. 
10. Allow dyslexic employees to use visual aids such as diagrams, drawings and flow charts. 

How can lenders support dyslexic intermediaries? The Mortgage Mum suggests:

1. Provide access to business development managers (BDMs) or LiveChat, as this is critical for talking through criteria that the broker may struggle with or misinterpret on the page. 
2. Encourage BDMs to be mindful that some brokers may be dyslexic but undiagnosed or reluctant to speak about their condition. 
3. Make criteria as easy to understand as possible and iron out ambiguities wherever possible. 
4. Present criteria in a clear format that is not too text-heavy – eliminate the waffle. 
5. Use bullet points rather than text-heavy chunky paragraphs. 

For more information, tools and guidance, visit the British Dyslexia Association website.

Which, of course, is not to say that they’re not as committed to the private rental sector (PRS) as they have always been – particularly professional players – but it does mean they may have needed to look at their investments in a different way, to reshape their portfolios in order to meet these challenges, to stay invested and keep making a profit. 

And that is not as easy as it might sound. As we have seen, a number of landlords – particularly those with one or two properties – have found their involvement in the PRS to be unsustainable.  

Even for those seasoned landlords, it may well have required moving into different areas of the sector – holiday lets, for example – or it will have required them disinvesting some properties in order to keep the portfolio profitable.  

What is interesting here – in terms of ongoing landlord approaches to their PRS investments – is how they are shifting to properties that are likely to be bringing them in higher yields. 

Increasing complexity not a shock 

Again, this is perhaps no surprise, and it has been a narrative for the sector for the past few years, but we have certainly seen a noticeable increase in this type of activity over the past 12 months.  

It should be instructive to advisers because they will certainly need to have stronger knowledge, relationships and interest in the more complex areas of buy to let as a result. 

Fundamentally, it’s what we should all have expected in not just a higher interest rate environment that produces higher mortgage costs, but also higher costs for landlords right across the board, whether that is maintenance costs, costs to up energy efficiency within homes, meeting licensing costs, perhaps they have been part of a rent control region, etc. 

This has all added up to a hit to profitability and, in order to stay invested, landlords are having to ‘cut their cloth accordingly’ and, where possible, either shift existing properties into, for example, houses in multiple occupation (HMOs) or multi-unit blocks (MUBs), or, when adding to portfolios, concentrate on those properties that can deliver higher yields. 

More interest in complex buy-to-let investments 

Our figures show a clear movement in the HMO direction. Looking at the loan origination detail by property type per quarter, we can see that for houses in particular, a bigger percentage of these are now being bought or refinanced as HMOs. 

Back in Q3 last year, the percentage of HMO houses was down at 14%, however in the first quarter of 2024, this had increased to 22%. And we can see a similar trend across all property types.  

In Q3 last year, the proportion of HMOs across all properties was just below 10%; in Q1 this year, it had risen to over 14%.  

It tells us that landlords want to maximise rental yield, and they understand that it is properties such as HMOs or MUBs that allow them to do this. Plus, of course, they are also reacting to the increased demand from tenants for private rented property at a time when supply has not been able to keep pace with that demand, or indeed with population growth, or the inability of people who might wish to buy to be able to do so, or indeed the increased demand for renting anyway. 

For advisers, it therefore makes perfect sense to ensure they are at the top of their game when it comes to the more complex areas of the specialist buy-to-let market.  

Our borrower type is split between two-thirds limited company/one-third private investor. So, it’s increasingly likely advisers will be dealing with limited company landlords with bigger portfolios – our average is 11 properties per landlord – who increasingly need finance for HMOs/MUBs, or who are looking to potentially redevelop existing properties, or looking to move into different sectors, or looking to diversify across the country, or all of the above. 

In that sense, it’s going to be increasingly important for advisers to be specialists in all of these areas as well, and to have strong working relationships with lenders who also specialise here.  

Buy to let continues to grow in complexity, and so do the needs of landlord clients – make sure you’re able to service those needs, and you’ll be in a strong position to grow your business alongside that of your clients.  

However, discussions regarding more specialist areas, such as bridging and commercial loans, can be noticeably absent. But why is this? 

It’s a bit of an elephant in the room – while some networks may operate an obligatory specialist referral panel, not all networks encourage brokers to actively advise in this area of the market themselves. 

There may be all kinds of reasons why they are reluctant to encourage brokers to explore areas of the market such as bridging and commercial. It could be due to perceived risk and a belief that this type of lending poses greater challenges to the broker and network, or it could be due to a financial arrangement a network operates with a referral partner. 

Branching out to specialist mortgages 

Unlike a residential mortgage, commercial loans, for example, are more about having good connections with business development managers (BDMs) rather than going through a sourcing system. While it’s true that commercial and bridging mortgages might require more work for the broker, such cases can also be more financially rewarding. 

I think it’s time the industry opened up the discussion and asked the question as to why some network models don’t help brokers more in this area. 

We no longer operate in a mortgage market where the clients contacting brokers are all vanilla cases. Instead of deterring a broker from handling a specialist case themselves, networks should be encouraging them to grow their business and expertise if there is an area they want to pursue. 

Bridging completions reached £1.69bn in Q4 2023, an 18.4% increase from Q3 2023, according to the Association of Short Term Lenders (ASTL). Meanwhile, a recent report from property lender Together; Opportunities and Outlook: The Future of Commercial Property, outlines how UK commercial property lending is set to grow from £90bn in 2023 to £118bn in 2028. That’s a 32% increase over the next five years – and it’s time for brokers to grab a slice of that pie. 

Empowering brokers 

While some brokers feel more confident handing over a client to a referral partner, others might wish to do it themselves but be lacking the support, which is a shame as bridging and commercial can make for some interesting cases. 

For networks, there are other ways; a 100% file checking process can help mitigate any risk the network might be worried about, as can offering members training and support to give them knowledge and empower them to advise on these areas themselves. 

If a broker needs to hand over the client to a referral partner, that not only means losing a level of control over their client, but also splitting the commission – as well as potentially having to pay another fee to some networks to access their specialist panel. 

As mentioned, the decision can also be a financial one. We operate on a flat monthly fee basis, with brokers keeping 100% of their proc fees and commissions. This isn’t standard across the industry, however, and if a network feels a broker can bring in more commission through less time-consuming residential mortgages, this may be the primary focus of the network. 

Of course, even with the option available, not all brokers want to branch out into more specialised areas and feel that their comfort zone is residential mortgages. 

Different ways of working

We often talk about how mortgage borrowers are not one-size-fits-all, and the same can be true of mortgage brokers. We launched our ‘mortgage desk’ towards the end of 2022, and this has offered a real insight into the different ways of working for brokers. 

As well as operating as a help desk, it also offers a referral service for brokers if they don’t have time or don’t wish to advise on the mortgage themselves. In some instances, the desk can also work in the opposite way, so a broker might want to focus on a larger more complex case and outsource the more regular residential cases to the mortgage desk.

Already this year, we have had 21 completions through our single adviser on the desk. These are from all areas of the mortgage market – it might be commercial, or a borrower with credit problems; the mortgage desk can help advise brokers on how best to place the case or simply refer it on and split the commission – which means the broker doesn’t need to turn potential clients away. 

It’s all about choice, and I think it’s time we opened up the discussion as an industry as to why more isn’t being done to equip and encourage brokers into more specialist areas. Networks should be there to encourage their members to grow and thrive.

Brokers need to have faith in themselves, but so too does their network. 

There is no requirement for a deposit as long as you can prove you have paid your rent for 12 months in a row, within the last 18 months, no doubt with other considerations as well. 

Close to a year on, we have just had the launch of Yorkshire Building Society’s 99% loan-to-value (LTV) mortgage, or at least its product for those who have a £5,000 deposit, with a maximum loan amount of £500,000, hence the 99% LTV element.

There are, of course, other products out there in the market that tread a similar ground, but these are undoubtedly the two most high-profile, and have had the most cut-through.

A waiting game for first-time buyers 

We now await to see how they might ‘land’, but these types of products are of course welcome for a group of potential first-time buyers who might have, up until now, looked at the deposit levels required, the affordability hurdle to be overcome – especially with higher rates – and wondered if they were simply years away from being able to meet the needs of most lenders on both. 

However, as we move forward, is it possible to see this moment as a tipping point?

A recognition that a catch-all approach to maximum LTVs for first-time buyers need not be the only option on the table, and that instead we can have loans offered above 95% LTV where, of course, the borrower fits the affordability criteria.

Let’s be honest here, while there is clearly (and perhaps quite rightly) some nervousness around the notion of 100% LTV mortgages, there has to be an acceptance that, for many borrowers, getting to a 5% deposit level is hard, but it needn’t necessarily be a barrier to them getting on the housing ladder.

For example, when it comes to a deposit, is 2%, 3% or 4% that much different to 5%, especially if you have been renting for any length of time?

In fact, as many have pointed out over the years, large numbers of individuals are currently paying more in rent each month than they are likely to be paying in initial mortgage costs. 

Now I know that owning a home comes with other costs as well, and these need to be accounted for, but should we be segregating a whole host of potential owner-occupiers out of the market, especially those who don’t have access to a Bank of Mum and Dad?

Filling a necessary post-95% LTV gap 

The point about renting, and wanting to act now, is also particularly pertinent given the current rental situation and its likely future.

Research from The Resolution Foundation released recently suggests average rents may increase by 13% over the next three years.

The imbalance between rental supply and demand continues to be felt in that regard, and there will be a whole cohort of renters who understand this, who want to buy their first home in order to get out of this situation, but currently do not have a ‘normal’ deposit and, with rents as they are, will find it difficult to save this amount. 

According to the English Housing Survey, housing deposits from family or friends have risen by 9% as a source for deposit in the last two years in England. Without access to that, we need a healthy post-95% LTV mortgage market to support those who can afford a home, and the mortgage payments, but don’t have that 5% deposit. 

Again, I’m not suggesting a move to 100% LTV mortgages, but as Skipton and Yorkshire Building Society have shown, lenders should be able to marry up the worlds of higher LTVs and utilising rental payment history to provide first-time buyers with products that fulfil that need. 

Lenders, of course, have access to the private mortgage insurance market to be able to mitigate the risk of offering such products, insuring ‘slivers’ of higher LTV thresholds against payment defaults and the like, ultimately securing peace of mind in offering these mortgages.

It does feel like a line is being drawn here, and I’m ever hopeful that advisers will have far more of these types of products to be able to offer first-time buyers. The demand is certainly there, and we need to get the message out as an industry that options exist.

They just need to contact an adviser to see how they can progress. 

This tends to come with the assumption that a mortgage valuation essentially does the same job as a survey and will involve a physical inspection of the property. Obviously, this is certainly not the case. 

The reality is that there remains a significant knowledge gap around the difference between a survey and a mortgage valuation, in addition to how surveys can highlight any serious problems and advise buyers of any works that may need to be completed in order to get the property up to their desired standards.

And this is vital information that offers valuable peace of mind for what is usually the largest financial decision that people will make over the course of their lifetimes. 

A home survey is recommended 

Rob Stevens, head of property risk at Nationwide Building Society, said: “As part of the mortgage application process, the lender will arrange and carry out a mortgage valuation. It is really important to remember these are for the mortgage provider only and the customer won’t get a copy of the report. The mortgage valuation may not always involve a physical inspection or visit to the property, as it may be an automated valuation model (AVM) or a desktop valuation.

“We always recommend the customer gets a home survey done when they buy a property. The surveyor that does the home survey will be a member of RICS (Royal Institution of Chartered Surveyors) and the customer gets a report on the property’s condition that is tailored to their needs. There are three levels of survey – Home Survey Level 1, 2 and 3, and it is best to speak to a surveyor to decide which is best depending upon the property and the risks that need assessing.” 

A deeper insight into a property

As Rob highlights, the risk of not obtaining a survey is that defects are not identified that could pose immediate or future risks, costs, disruption and upset. Being hit with a bill that you were not expecting does not allow you to budget or plan for any necessary repairs and doesn’t give you the opportunity to negotiate with the seller before you commit to the purchase.

Everyone who is a property professional should be encouraging and supporting customers to make decisions in their best interests. When purchasing, having a RICS surveyor provide a professional report detailing the condition of the property is, to me, quite clearly in the customers’ best interests.

In fact, this forms part of Consumer Duty, to act to deliver good outcomes for retail customers supporting them through their journey to pursue their financial objectives.

It’s essential for this knowledge gap to be addressed as early as possible in the homebuying process, meaning estate agents, mortgage brokers, surveyors, solicitors and lenders all need to help buyers realise the value of a survey.

If not, then those buyers who think they don’t need a survey because their mortgage lender is arranging one could be exposed to unknown property-related issues and potentially serious financial implications further down the line.

We have a perfect example of that within our market, when it comes to leasehold reform, which fulfils this ‘brief’ incredibly well.

Beginnings of reform

Last month, you might have seen the Competition and Markets Authority (CMA) ruling entitled ‘Modern Leasehold: restricting ground rent for existing leases’. 

This was important and another step towards getting fairness for existing leaseholders, and reforming a system that leaves many at the mercy of doubling ground rents, trapping them in a cycle many feel unable to get out of. 

In this most recent intervention, the CMA has explicitly stated that ground rent is “neither legally nor commercially necessary” and explained that government is likely to need to ensure consumers do not continue to pay more and more for this ‘charge’. 

However, progress is being made, and the CMA has announced that eight more firms have removed problematic clauses from their leasehold contracts. This means approximately 500 more households are not going to be subject to their ground rent doubling in price.

We have urged our membership to keep an eye out for all the freeholders and housing developers listed by the CMA, to ensure they have removed their clauses. We’ve also asked our members to let us know whether leaseholders who should be benefitting from this move are being charged excessively for deeds of variation to enable these changes to be implemented. 

It has happened in the past, and is still being used as a money-generating exercise, in part because they can no longer benefit from the rising charges they are committing to remove. One last throw of the income-generating dice, if you will. 

Progress for leaseholders 

However, as mentioned, this is another positive step and, certainly for those impacted here, it should ensure they are no longer trapped in these properties, unable to sell or remortgage because of the doubling of ground rent every 10-15 years. 

This CMA intervention is also of interest, within the wider scope of home selling and buying and the process we have in place in order to ensure all participants are fully aware of what they are getting into, what their lease covers, the clauses it may contain, and whether all of this means they no longer wish to go ahead, for example, with putting in an offer. 

We have seen so many times, information only coming to light after the potential purchaser is emotionally – and often financially – invested in buying, and clearly when these are hugely significant commitments and responsibilities, such as being a leaseholder, or ground rent/service charges/estate rentcharges, etc, they should be known from the outset. 

Within the CMA documentation, it actively recognises the National Trading Standards Estate and Letting Agents Team (NTSELAT) for its work on material information and the guidance it provides.

It also notes how this has improved the transparency of the information available, ensuring homebuyers know the tenure of the property, the annual costs, etc, of owning the property “at the earliest opportunity in their property search”. 

It cites the NTS again for the work it is doing with property portals “to improve the availability of upfront information, including ground rent obligations, when consumers are searching online for property”. 

Correcting past unfairness 

In a very true sense, we’re seeing the chickens come home to roost for a period of many years when those involved in the sale of leasehold properties – specifically the developers and the freeholders – were relying on the breaking of Consumer Protection Rules (CPRs) to secure sales, by not providing this highly important information at the point of marketing. 

The repercussions of this now being taken more seriously, requiring agents and the like to provide this material information upfront, is clear to be seen, as are the repercussions of not doing this for all those years. 

One suspects that this ‘stick’ approach will continue to bear fruit.

Not just in terms of extricating existing leaseholders from these onerous clauses, but also in the ‘carrot’ it can provide to all those active in the property market, where greater levels of transparency, upfront information, etc, provides greater certainty for consumers, effectively meaning we can increase pipeline turnover and ensure far fewer dis-instructions and aborted or fall-through transactions. 

We are by no means ‘done’ in this part of the market, but the direction of travel continues to be a positive one, and it is to be hoped that we’re able to deliver much better news for those still living in these leasehold properties, and much greater clarity for those considering buying any property, let alone a leasehold one.