Complex Buy To Let
High street lenders ‘too late’ to enter limited company BTL – Ying Tan
Vanilla and high street lenders have shown an interest in lending to buy-to-let (BTL) landlords who purchase using limited company vehicles, Dynamo founder Ying Tan has said.
Speaking on the Accord Growth Series podcast with Chris Maggs, senior commercial manager at Accord Buy To Let, Tan said his company had received calls from mainstream lenders over the last 12 months, asking for their thoughts.
However, Tan said he believed it was “too late” for any new lenders to enter the market due to tight margins and the space being heavily populated.
He said: “We’ve seen one or two casualties over the last 12 or 18 months. With margins as tight as they are, competition as high and as strong as it is, that could continue.”
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Product innovation
For those currently operating in buy to let, Tan said innovation needed to focus on speed, efficiency and automation rather than product design.
He said also lenders needed to look at methods which allowed people with different circumstances to get access to borrowing within their means.
The sector had not yet seen a lender which “dissects income and expenditure” to assess affordability, Tan said, as he suggested this could be something the market would see in the future.
“Lenders have got to keep innovating, keep looking at ways they can differentiate themselves from others and ensure that lending remains responsible,” he added.
Tan concluded: “Sometimes [affordability is] not as easily identifiable just from one single calculation of a rental coverage which sometimes can be narrow minded when other things are not considered, hence why top slicing has worked for those with larger incomes.”