Speaking on a Mortgage Solutions debate in association with Accord Mortgages, Checkley said that when coming across lenders where the interest coverage ratio (ICR) and stress rate had been increased, it didn’t work well for landlords operating in areas where the rental yield was low.
He added: “There were many clients who refinanced a few years ago who just scraped through when they were doing a like-for-like refinance, and now they just won’t pass with stress tests for some lenders at eight and a half per cent.
“So, I think it’s going to be a really testing time for landlords.”
He said product switches would be a key tool for brokers, while landlords would have the options of exiting the market which may push rents up, or seeking higher rents by converting to a house in multiple occupation (HMO) or holiday let.
Working hard to serve landlords
Jeremy Duncombe, director of mortgage distribution at Accord Mortgages, said the buy-to-let sector was still really important for the lender.
He said that this year, the lender had “really worked hard to get our buy-to-let proposition into a place where we would really feel that we could call ourselves a buy-to-let lender”.
Duncombe said nothing had changed with regard to Accord Mortgages’ view of the sector.
He said the recent changes to stress rates and ICR will inevitably have an impact inthe short term, but added Accord was “committed to the market” as it was important for the UK to have a “strong private rental sector”.
Opportunity brought by change
Nick Morrey, technical director at Coreco, said it was not just about landlords who wanted to stay in the market but also those who want to enter.
He said if properties did start coming to market in higher numbers, then those with cash available would be able to capitalise on lower priced homes during a potential period of recession.
“There is always opportunity when there’s change,” Morrey added.
Watch the video [5:28] hosted by Victoria Hartley, contributing editor of Mortgage Solutions, featuring Jeremy Duncombe, director of mortgage distribution at Accord Mortgages, Nick Morrey, technical director at Coreco and Ed Checkley, managing director of Advias.
Sponsored content in association with Accord Mortgages. For Intermediary Use Only
