So, 2016. Ouch!
If you own a buy to let, then quite simply, ouch. This year has hit harder than an Anthony Joshua right hook. Without a glove. Or a mouth guard. Put simply, it’s bloody hurt! Especially if you own investment property in London where rental yields are almost laughable when compared to the rest of the country. Good luck trying to get 145% at 5.99% for those million pound plus loans with some lenders. All the best trying to obtain 125% at 5.5% with a 75% LTV product in London. Oh, and for good measure, you can pay an additional 3% on your stamp duty if you are buying another property. Do you surrender yet buy to let owners? DO YOU SURRENDER?!
It’s been one hell of a year, that has thrown challenge after challenge to the private landlord. In a crazy year where private landlords have even been seen selling properties to themselves to place in limited companies, it really has been quite a story. The pressures of the PRA are hitting lenders hard and stress tests are certainly proving stressful. In fact, my hairstyle is at its most popular this year, as hair is falling out all over the place. Not facial hair however, as the beard trend continues to gather pace (Rooney currently resembling Brian Blessed as I write this).
Throw in the Mortgage Credit Directive, Brexit and the fact a man who said live on radio ““I have a great relationship with the blacks” is now the President Elect of the world’s most powerful country, we are putting so much stuff in our Nutribullet that it’s surprising the blender is not broken.
That said, there have been some triumphs. We say hello to HSBC which has now broken with its direct to consumer tradition and warmly ushered in select intermediaries to its distribution. This has been a massive victory. We welcome again the capabilities of up to 5.5 times income with some lenders where logic has played its part. We must also welcome back our long lost friend interest only that has found its way back to the majority of lenders. After what seems like an eternity of being told “it’s something we are looking at”, the Big Four – Barclays, Santander, Halifax and NatWest all have this back in their weaponry, offering clients more choice, more flexibility and the opportunity of being treated like an adult again. Above all else, it creates choice. With choice comes competition, and with competition comes price wars. This can only benefit the consumer.
I have had 15 years in this industry but this last 12 months brought more challenges than any other.
That said, I look at the business submitted and it’s stronger than ever. I look at the FTSE, and it’s performing well. Challenger bank share prices continue to grow post Brexit; OneSavings being the stand out (around 180p in June now trading at 356p), while its buy-to-let arm Kent Reliance is a top five lender in some London broker accounts. The pound is getting stronger and stronger against the dollar after its initial crash. House prices have somehow still remained stable.
If we knew in January 2016 what we know now, you would have been forgiven for thinking your pessimism got the better of you. As we approach the 10 year anniversary of the credit crunch (yes, I said 10 year anniversary), lessons have clearly been learned and I still believe this industry has a great future. Young talent is rife and ambition is high. One thing 2016 has shown is that whatever challenges come our way, we can face them head on.
So a collective well done to all brokers, underwriters and lenders. We’ve done it, survived one of the toughest years since the crunch and all that remains is for us to get through the now infamous triggering of Article 50 and as the late, great David Bowie once said…we can be heroes.
Wishing you all a Merry Xmas and a Happy New Year.
