The lender said research carried out by BVA BDRC on its behalf highlighted gaps in knowledge and erroneous market perceptions by landlords which brokers could use to engage their clients.
Presenting the results at Mortgage Solutions’ Buy to Let Market Forum, Aldermore national sales manager Matt McCullough (pictured) said this was a clear request from landlords.
“Across individual and portfolio landlords, the key feeling that came out of the research is that they all desire more engagement from brokers,” he said.
“And that’s a real key theme – people think the engagement is lacking across the buy to let space from brokers and lenders.
“Whether that’s how things are done, what’s changing and why, the key thing is these people really want you to reach out to them.
“So speak to them, tell them what can happen next, why things have changed, and how you can help,” he added.
Clear lack of engagement
McCullough noted many landlords believe the changes mean there is a reduced product range on offer for them which, he said, was “staggering” given there are around 2,100 buy-to-let products available.
And there was a real fear from around one in three portfolio landlords that they would be rejected for the mortgage, emphasising the work still to do.
“Clearly the lack of engagement from lenders and brokers is tell-tale there because clients feel there are fewer options today than are actually available,” he added.
And McCullough also reviewed data from UK Finance on the overall state of the buy to let market.
The average stress rate applied to buy to let mortgages last year was 5.5 per cent. However, while some lenders could offer lower terms, some were also stressing at 15.6 per cent.
“So you can understand some landlords thinking that it’s making it difficult to obtain what they thought was a standard mortgage five years ago,” he continued.
“Landlords really need advice on the whole of the market given the changes that have occurred.”
Growing demand to transfer ownership
The Aldermore research noted a growing demand to transfer ownership of properties into a limited company, not just for completing new purchases.
One in ten small landlords said they had already done so, with 12 per cent considering it. Fifteen per cent of portfolio landlords had transferred ownership already and 10 per cent were planning it.
McCullough explained that this was a key area for brokers to explore as they could use their portfolio to fund these transfers.
“Clearly we want them to seek tax advice first,” he said.
“But these are the avenues now where people can remortgage to release capital to buy these properties in limited company names.
“Or they can release capital from the portfolio to pay any capital gains that are attributed to themselves.
“All these things that are happening in the background, which you may not think of, landlords really want engagement with because we can take them on the journey and the next steps of their portfolio growth,” he added.
Spanning a five-year fix
McCullough also highlighted that landlords who took out a five-year fixed rate deal in 2014 would be facing a significantly different environment when they remortgage this year.
“Everyone knows it’s become a lot more difficult to get a BTL mortgage across the line in the last few years with all lenders, not just the high street,” he said.
“For clients who took out a five-year fix in April 2014, look at what’s changed in that landscape, just as they are on their one product.
“So imagine how a landlord is feeling now. There’s been so many changes since they took that product, but it is in our hands to outline the future,” he concluded.