According to research, property investors are feeling bold about the lending environment; more so than they did last summer, just after the UK voted to leave the EU.
While 58% of 128 property investors polled by Shawbrook Bank last July said they felt confident about their access to finance, this year 60% gave their thumbs up on the lending environment for the year ahead.
Optimism has prevailed despite a number of disruptive events in the property market. Last year saw the introduction of the 3% Stamp Duty surcharge and the Brexit vote in June. This year, the market has already had to cope with regulatory underwriting changes implemented in January and cuts to landlord tax relief starting today.
Brokers say it is precisely these types of reforms, however, that have helped to generate a more vibrant lending market.
Buy to Let Club managing director Ying Tan said: “It is clear that lenders are jostling for business, rates are at historic lows, and there is a wide choice of lenders, so it is no surprise that landlords are increasingly confident about the lending environment.”
Plan A Mortgage Brokers managing director Adele Turton explained the reforms had helped open up access to lenders while triggering a wave of innovation.
“Because of the tax changes lenders had to evolve and change the way they underwrite. There is more innovation in their products and clients are seeing that rates are coming down,” she said.
“There are also more options now. We have seen some lenders who would not take any direct business from brokers [open up more]. They have recognised that for specialist lending it’s about quality rather than quantity.”
Specialist lenders such as InterBay, she explained, had somewhat loosened their strict masterbroker ties and were now speaking to brokers about potential business.
But it’s not all about lenders. Landlords too have adapted. “Despite the recent challenges in the buy-to-let market landlords are resilient and will evolve to the changing environment,” said Tan.
St Georges Finance managing director Adrian Dadds agreed, although he said the regulatory changes did not go unnoticed.
“[With the underwriting requirements] it’s harder to raise the same level of money. But people have adapted. Lots more are going into limited company structures rather than [buying properties] in their own names now and more are opting for fixed-rate products,” he said.
For him business was very much on the up. “We are writing lots of new business and have a long pipeline [waiting],” he said. “The Brexit decision doesn’t seem to have impacted anybody at all.”