Allowing buy-to-let investors to use non-rental income to meet affordability is taking a short-term view of the market, according to Whittaker.
In a keynote speech at the forum yesterday, he said: “I think top slicing in buy-t-let mortgages is the devil’s spawn, because what happens when borrowers get to their fourth property and they move into the portfolio environment?
“They cannot move upwards, downwards or sideways because they’re over geared and they’re over stressed and they can’t get the next property.
“No matter how much deposit they choose to put into it – because you’ve got a portfolio that’s too highly rigged and if you’ve got early repayment charges on the product, you can’t get them out of their existing debt arrangements.
“So try to think over the horizon.”
Whittaker acknowledged the buy-to-let market is still adapting to regulatory and tax changes, as the ground continues to shift.
He said: “The only constant is change and yet more change.”
But it’s now up to brokers to guide investors through the upheavals, according to Whittaker.
He added: “Our job is to make sure that we can help landlords stay on the journey.”
Downward trend but opportunity ahead
In a sobering outlook, Whittaker said the market is currently on a downward trend, and predicted buy-to-let activity would contract further over the next couple of years, but there is light at the end of the tunnel for advisers.
Part of the current decline is driven by an increasing trend for landlords to opt for five-year, rather than two-year fixed-rates, pushing down frequency of client activity.
And some landlords are reacting to increased difficulties in the market by selling up, according to Whittaker.
This could continue as many landlords have not “fully grasped” the impact of changes, especially in relation to mortgage interest relief.
However, a market in a state of flux shouldn’t put off advisers.
Whittaker said: “Out of all this change there’s always an opportunity both for lenders and brokers to grow.
“If you get it right, you can be the winner.
“Brokers do well, as do specialist lenders, when there’s change. When it’s a level playing field, it’s then just a pricing fight.”
And, after 2019, the market will pick up again, Whittaker predicted.
He said: “We’re still settling down into this new world.”
Product transfers are set to be a big part of the new landscape, as well as limited company borrowing, which could make up as much as 40% of the market by 2019, according to Whittaker.
He added: “It matters that you get on board that particular bus.”