Two significant lenders in the buy-to-let market suggested the key to surviving the regulatory upheaval would be to ensure processes were as straight-forward and simplified as possible.
But they added that adapting to the new environment could see lenders having to retrench either by choice or necessity.
Poor lender communications
Leeds Building Society told Mortgage Solutions it believed the lending community had not been good enough at telling brokers how the Prudential Regulation Authority (PRA) changes would be enacted.
“Lenders can do well or can do a mediocre job of it,” Leeds BS director of product and distribution Jaedon Green said.
“Lenders have indicated what they will do to their criteria but not how they will do it – they need to be prepared. This doesn’t need to be over-intrusive but we’d like to see more lenders divulge how they are going to implement the changes,” he added.
Leeds BS has confirmed it has improved its processes to help brokers deal with the changes for portfolio landlords.
This includes installing a dedicated team of underwriters, training for business development managers and an improved, simpler process for submitting applications.
Retrench or redesign
Green admitted that getting the process right could be crucial to being an attractive source for business.
“Those lenders that have committed to portfolio lending have to get it right,” he continued.
“If one lender is making it difficult you are going to struggle to place cases. Those who get it right will get the volume and they will be preferred lenders as long as the process is right.
“Some lenders will retrench and say this isn’t worth the hassle. That might be the solution for small lenders, or they may decide that they have to redesign the process. We think it’s more helpful if people get it right from day one,” he added.
Drift in and out
Green echoed comments from One Savings Bank sales director Adrian Moloney, who also addressed the likely challenges for lenders from the start of October and warned it may be a turbulent market.
Speaking at the Financial Services Expo this week, Moloney said: “The winners will be those who keep the processes as simple as possible, as light touch as possible, and from a broker perspective advice has never been more needed.
“The potential challenge is if volume is pushed to one lender, how do you control volume? Potentially that is via price, so you could see lenders drift in and out of the market if they can’t keep up with the volume or amount of business coming.
“I think that is one of the key challenges after 1 October,” he added.