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Breakfast Briefing: Buy to let in review

  • 12/10/2011
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Breakfast Briefing: Buy to let in review
The latest Mortgage Solutions Breakfast Briefing saw our expert panelists look at the challenges and opportunities in the buy-to-let sector, from predicted growth in gross lending to future product development.


Charles Morley, head of sales at Kensington Mortgages, started off his presentation with the figure 1.34m.

According to Morley, this is the number of buy-to-let mortgage loans in existence in the UK mortgage market, worth approximately £155bn – a £6bn increase on last year.

He told delegates that buy to let is the “bright spark” in the mortgage market and he expects it to grow by up to £8bn over the next three years to around £20bn.

The argument to move into the sector was further strengthened when Morley explained how the crisis in the eurozone and stock markets could mean that the residential market place will see little improvement.


Morley than presented another big number to the audience – 18m.

This, he explained, represents the number of people in the private rental sector – more that the whole of council house occupation and housing association occupation put together.

He rounded off his presentation with a special focus on intermediaries, explaining the importance of understanding different lenders’ requirements.

Morley said: “In the last 12 months, the buy-to-let sector has kind of been turned on its head. There are different criteria from lender to lender who will accept different things.

“It is critical that a broker understands the criteria before submitting an application.”


Adam Smith, head of intermediary accounts at Legal & General Insurance, outlined the importance of landlords having the right cover in place to deal with arrears and evictions.

He told delegates that 52% of landlords reported rental arrears over the last 12 months.

According to Legal & General’s research, the average late paying tenant owes £3,730 a month and almost 50% of repossessions are due to tenants not paying their rent. The average time of a tenant defaulting on their rent is around six months.

Smith explained the benefits of landlords taking out Legal Expenses and Rent Guarantee cover, which provides a monthly payment to cover rent arrears and legal expenses to assist with aid during the eviction process.


The Mortgage Works lead manager of product management and pricing, Greg Went, told attendees how the market has come to know a “new type” of landlord.

He described this as someone who has proved to be more resilient than a pre-credit crunch landlord and has a strong focus on long-term investment potential.

In addition, Went explained what he thought future buy-to-let products will look like.

“As base rate rises, we might start to see a simplified product on offer, with one that hasn’t got so many incentives.

“We will probably see the role of the arrangement fee in securing the lowest rates mortgage lenders have to offer,” he said.

Looking ahead, Went predicted that there will be 800 products available on the market over the next 12 months and predicted LTV ratios will stay between 75% to 80%.

Like Morley, he gave the audience something to smile about by projecting that the buy-to-let market will hit £13bn by the end of the year.

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