After all the accidental landlord has a very different set of characteristics to a professional landlord whose income is generated solely from a large portfolio of property.
The novice will be entering into a new world which has significant positives if done right and life changing downsides if it goes wrong and they are therefore in need of advice. Indeed many brokers charge a fee for their buy-to-let advice – not an administration fee for setting up the mortgage so applying an MMR-style sales process shouldn’t be seen as negative.
The challenge for the lender in this EU-directed world is systems. We all saw the work required to implement MMR such as affordability calculators and ONS data modelling, the question is can this be replicated in the buy to let arena?
Is there enough data on accidental landlords to be able to model their behaviour both in terms of how they use the new income, and the cash reserves they would need to build up to mange any tenant demands on their rented home?
Some lenders pulled out of the regulated buy-to-let market because it was simply not clear how they would manage the product line in an MMR world. The emergence of these regulations could see accidental landlord products go the same way if the insight isn’t available and affordability modelling has to stretch between residential and buy-to-let.
Will we see a rush towards buy-to-let before the new regulations come in as consumers realise the implications? Quite simply I don’t know. But with an election, a possible base rate rise and an EU directive on the horizon, 2015 could be an interesting year.
Neil Hoare is head of lending at Personal Touch
