Tackling the issue in Market Watch this week are:
Nigel Stockton, financial services director at Countrywide
Andy Young, managing director at TBMC
Matthew Arena, managing director of Brilliant Solutions
Nigel Stockton, financial services director at Countrywide
The statistics are interesting; however, it doesn’t match what we’ve seen.
So far this year, 12% to 16% of all of the products we have sold have been buy-to-let mortgage products.
Availability of multiple occupancy and partnership/corporate mortgages is improving, as are LTVs where standard products are around 75% LTV; although obviously Kensington, amongst others, are now offering higher LTVs.
Activity in this sector remains steady and, with the entrance of new lenders to the market, we expect a significant year-on-year increase of around £2bn of products sold. This means by the end of the year, we could be hitting the £10bn to £11bn mark.
Yet, people believe it’s more difficult to access buy-to-let finance.
Although there is a rise in the number of buy-to-let products available, I suggest the biggest issue in all of this is the consumer uncertainty spurred by fears of job losses and house price falls.
This drop in consumer confidence has resulted in the perception that it is extremely difficult to secure finance at the moment.
We have a real communication opportunity to say that there is now no doubt that lending criteria are easing in the buy-to-let market.
There genuinely are some attractive deals out there, as well as some great opportunities to snap up some great investment properties.
With lenders a lot more wary of lending to first-time buyers and want-to-be buyers struggling to save hefty deposits, the lettings market looks set to be strong for a few years to come.
Andy Young, managing director at TBMC
The buy-to-let mortgage market still presents challenges to landlords as lenders maintain a cautious approach to risk.
However, there have been significant improvements in the last year, which mean that the choice of lenders and products available to property investors is much greater.
In the last 12 months we have seen Paragon Mortgages return to the market, offering a range of products to professional landlords, and with a new lending aggregate of £5m.
This has given investors with large portfolios a new avenue for expansion, as some other lenders have reduced their exposure levels.
There are also now more products available for first-time landlords, limited companies, HMOs and light refurbishments, which mean that we are able to place a larger number of cases for landlords than a year ago.
The arrival of new lenders into the buy-to-let mortgage market has definitely improved the prospects for landlords, resulting in increased competition and better deals.
The level of buy-to-let lending has also improved and TBMC’s Landlord Profile Tracking Index for Q1 2011 showed a 62% increase in applications compared with Q1 2010.
We have also seen average loan sizes and LTVs increase, which reflects the better conditions for property investors.
There are likely to be further developments over the next couple of years, providing landlords with more opportunities and a reason to feel optimistic.
Matthew Arena, managing director of Brilliant Solutions
Our experience has been very different.
Introducers come to us with a wide range of enquiries from landlords and I would say that we are able to provide solutions to more situations this year than we have since the credit crunch caused the lending market to implode.
For a start, there are more lenders involved in actively lending to buy-to-let landlords than at any time in the past three years and the reason is very simple.
While the residential purchase and remortgage market is static, the resultant need for rental property and the knock on effect of higher rentals has meant that lenders can make a wider margin lending in buy to let than they will elsewhere.
The only real issues this year have been twofold.
The first is managing landlord expectations, which tend to be optimistic in terms of the value of their properties and therefore being able to fit the LTVs.
The second issue is where a landlord has a portfolio he wants to remortgage and it fails a lender’s stress test.
Frankly though, this is why brokers come to specialist distributors like us because we have the expertise to know where to go. For example, we look to the commercial lenders rather than the high street to provide more sympathetic solutions for HMO properties and some more complicated portfolio propositions.
Likewise, landlords with any kind of adverse credit can be difficult. It is likely some of the research referred to might be negatively influenced by this category of landlord.
However, we have found sympathetic responses from some of the smaller lenders for introducers’ clients with adverse.
The message with buy to let is that it pays to shop around.
