Rather than considering the numbers in their proper context, the predominant headlines appear to be intent on alarming people and seeding panic.
I’m a realist, and anyone in the mortgage market will tell you that the market isn’t what it was 18 months ago. Buy-to-let volumes are down, residential transaction numbers are down, house price inflation is down.
But let’s not blow this completely out of proportion. Buy-to-let is definitely not dead: to suggest otherwise is simple scaremongering. It is changing though – and advisers have always been good at coping with change. In fact, because recent tax changes and underwriting standards have made things harder for private landlords commercially, now is actually when they would really benefit from advice.
Not only can advisers show their worth by being proactive in going back to previous buy-to-let clients to ensure that they are taking steps to review their portfolios and finance arrangements, following this review it’s likely that advisers and specialist distributors are going to be best placed to help them refinance any properties to rebalance their portfolios.
This is largely because the specialist lenders are really picking up buy-to-let business by offering criteria that reflects market needs now and in the future as opposed to the buy-to-let of old – and it’s advisers who have access to these lenders and deals at good prices.
The other area of the market I’ve seen bashed a bit is expats investing in property in the UK. This ties into activity in the buy-to-let market as the majority of these investors are seeking finance to fund portfolios in the UK because they see long-term value in British property.
A recent survey by Countrywide found that overseas landlords owned just five per cent of all homes let in the UK in 2017, down from 12% in 2010 – a record low. London has seen the largest fall with one in ten homes let this year owned by an overseas landlord, down from one in four in 2010. In prime central London overseas-based landlords owned nearly a third of all homes let in 2010, a figure which has fallen to 23% in 2017.
This paints a pretty negative picture but our experience as a firm is the opposite of this. We’ve seen the number of foreign investors looking to purchase in the UK rise over the past year – I’d wager the disparity is driven by a fall in the number of 100% cash purchase investments being made at the very top end of the prime London market.
Instead, foreign investors are looking further north for higher yielding buy-to-lets in cities like Manchester, Nottingham, Birmingham and Leeds as well as in Scottish cities Edinburgh and Glasgow. Yields matter more to these investors because they’re geared purchases and not simply properties seen as an alternative to a bank account.
While Mortgage Credit Directive rules have complicated things for borrowers paid in a foreign currency, it’s still very possible to arrange competitive terms on mortgages for both expats and foreign buyers where lenders have confidence in the introducing adviser. So – while things are undoubtedly slower in the mortgage market, there’s still plenty to do.