Speak to any landlord and they’ll gladly tell you about the challenges they’ve faced over the last few years. The Stamp Duty surcharge, restriction of tax relief and new lending rules, to name but three, have all made letting to private tenants less attractive and arguably less profitable.
But property investors are not the only ones coping with change in the sector.
Lenders have also overseen a seismic shift in both their products and their processes to keep pace with regulatory and government interventions. And the dust hasn’t settled quite yet.
Across the market, they are still regularly adjusting their pricing and lending criteria, not only in response to rule changes, but also in an attempt to win more business in a very competitive market, the emergence of new specialist lenders and sub-sectors such as short-term lettings grabbing the attention of more established landlords.
It’s a moving picture and the best buy-to-let lenders are moving with it, adapting our propositions to stay competitive as well as compliant.
It’s good news for landlords because competition in the buy-to-let sector means better rates, lower fees and a more flexible approach to lending, within the new rules.
But what does it mean for brokers?
Intermediary impact
You’ve had a huge amount of change to manage too, of course.
By now, you will have got to grips with the new Prudential Regulatory Authority (PRA) rules on affordability and portfolio lending introduced in 2017.
But in fact they marked the beginning, not the end, of a process.
The PRA rules represented a significant regulatory challenge, but lenders have been evolving their propositions ever since, particularly so this year. Now the new processes have bedded in, we’ve all had the opportunity to look at the landscape anew and see where improvements can be made.
In 2019, we have seen a different landscape indeed including increased LTV lending, an increase in limited company and more top-slicing across the buy-to-let sector.
Many of the changes have provided more options for your landlord clients, which is why it’s so important to keep up to date with changes.
Opening access
The latest change from BM Solutions, for example, is the extension of our maximum property limit from three buy-to-let mortgages held across Lloyds Banking Group to five. This will open up access to our mortgages to many more of your landlord clients including portfolio landlords with four or five properties.
In line with the change we’ve increased our maximum lending limit from £2m to £3m across the group.
We made this decision because brokers have told us that they have high quality landlords’ clients with standard needs, whose only barrier to a BM mortgage was that they had already reached their property limit with us. These clients would have preferred to add to their borrowing with us, but were unable to.
We’ve listened and made the change so that your clients can access competitive traditional deals from a lender they trust.
Stay up to date
So how do brokers ensure you are up to date with all the lender criteria changes across the market?
Your sourcing system should be accurate but it also helps to have an overall grasp of what lenders will offer.
Your network or mortgage club will usually inform you of criteria changes, so always keep up to date with the communications they send.
Lenders will also keep you notified of how their criteria are changing and a good BDM will talk you through how that will affect your clients.
Speak to your peers, read the trade press and follow key mortgage commentators on social media so you don’t miss an announcement.
As the market becomes more segmented and new lenders offer solutions for complex landlords at a premium, there remains a large core market of buy-to-let borrowers who want a traditional transparent mortgage.
Lenders are still changing their criteria as the new lending regime settles down, and BM Solutions is committed to making its mortgages more widely accessible.
Make sure you are on the front foot when it comes to finding the best solutions for your clients.
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If you do not have professional experience, you should not rely on the information contained in this communication. If you are a professional and you reproduce any part of the information contained in this communication to be used with or to advise private clients, you must ensure it conforms to the Financial Conduct Authority’s advising and selling rules. Birmingham Midshires is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628. This information is correct as of August 2019 and is relevant to Birmingham Midshires products and services only.
