The industry needs to speak with one voice – MT Finance Supper Club

On 4 May, MT Finance held a Supper Club at the Park Row restaurant in London with brokers, lenders and distributors in attendance to discuss topics including the state of the specialist market, industry education and how the industry can work ‘better together’.

There have undoubtedly been upheavals in the specialist market in the past eight months since the ‘disastrous’ mini Budget. However, if you only read the mainstream press, you’d believe that the sector was on its knees and that buy to let (BTL), in particular, was on life support.

However, according to the panel, while there are headwinds, the specialist lending market is in rude health.

State of play

One distributor noted that there had been a large increase in cases recently but highlighted that media headlines had damaged client confidence.

He said: “When we speak to our members, they are saying they are getting busier again. We find when clients have conversations with experts, they are more at ease but when they read the headlines, they start panicking. When they speak to brokers, they are calmer.”

Attendees agreed that the headlines in the press were ‘awful’, ‘damaging’ and ‘pure clickbait’.

One broker said: “The rhetoric from the government and the press about the mortgage market is frankly ridiculous.”

However, despite the best efforts of the mainstream media to denigrate the industry, many on the panel noted that, during such turbulent times, specialist lending was coming into its own.

As one broker said: “One of the biggest positives that has come around in the past five years is the birth of the more specialist broker. The clients are changing and there is more need for specialist lending.”

Others pointed out that more needed to be done to educate clients about specialist lending.

A lender said: “There are great smaller lenders out there. I have my mortgage with a small lender. However, the issue is that many people looking for a mortgage just don’t know them.

“We need to get people to understand that a high street mortgage may be fine but it’s not necessarily the best advice or the best mortgage for your circumstances.”

Get online and get lobbying

In terms of getting the message out about specialist lending, panelists mentioned a number of different pathways.

One broker remarked that ‘you needed to go where clients hang out…and that’s social media.’

He continued: “If you have 15,000 people following you, then it’s not about sales pitching, it’s about scenarios and strategies and building client knowledge. You want an educated client coming to you and social media can help you give them that information. I think social media is still underrated as a channel.”

Others noted that a combined effort by the industry on social media offered an opportunity to counter the wealth of poor advice on apps such as TikTok and Twitter.

One broker said: “We need to look at the way consumers access content and educate themselves. Everything is online now. And the access to misinformation is huge.

“There is an opportunity for the specialist lending market to combine – whether that’s through networks or trade bodies – to go out and promote good specialist advice that covers a huge and growing population.”

This led attendees to call for more involvement from lobbying groups.

One broker said: “Groups like the Association of Mortgage Intermediaries (AMI) and Intermediary Mortgage Lenders Association (IMLA) need to be involved. They have that influence with mainstream media. [We] can work together to educate the consumer that there is a solution out there for everyone.”

Education across the piece

The idea of greater collaboration from all sides of the industry was echoed by attendees.

One distributor said: “From our perspective, it’s about educating our brokers and members. It’s about teaming up with brokers on our panel. We hold workshops and webinars. We don’t try and bring in the biggest lenders, we focus on specialist lenders so brokers are aware that there is choice available for clients.

“The more education we can get to the brokers – the more they can help clients find solutions, and explain why it may not be a mainstream lender. Clients will then talk to friends and family and then by word of mouth it will spread.

And, in that spirit of hands across the water (or the table, in this case), lenders and brokers came together, explaining the symbiosis between their roles and how it needed to be cultivated.

One broker said: “From our perspective, we are trying to educate the lenders about how things work for clients. It also goes from the broker side to introducers. It’s about spreading the education in every direction.”

A lender reciprocated, saying: “It’s collaborative. Underwriters feel challenged by brokers but they have to listen to them because they are the ones who pay the wages. Brokers have the education and are touching the client base. A broker can educate a lender. It works both ways.”

Working together is key to building a better BTL business

The discussion finally turned to the embattled BTL sector. Brokers highlighted the fact that portfolio landlords were more likely to ride out the storm in the BTL sector than their amateur or accidental counterpart.

One broker said: “For BTL, there are two sides to it. You have an experienced group of landlords who have been there, seen that done it. If you go back 10 years when rents were lower and rates were similar, the yield wasn’t there – now you have higher rents and higher rates and those with portfolios and portfolio landlords can cope and blend. The amateur landlord is where the fear sits. That’s where you have most of the issues.”

Others echoed this view. One broker said: “More professional landlords can absorb the ‘hit’, but a landlord with one or two properties and that much coming out of their income, they would end up selling that property.”

Most agreed that solving those issues came down, once again, to education, with one broker noting that even the most experienced landlords needed advice.

She said: “Education is definitely key. One of our clients was doing his 100^th mortgage and I still had to explain the difference between a fixed and a tracker rate. It doesn’t necessarily mean because they have a larger portfolio that they understand.”

A broker noted that landlords needed to understand how and where they could get help.

She said: “For smaller landlords, it depends how they hold those properties. If they hold them in their own name, and are not educated about putting them into a limited company or incorporating them, they are going to come unstuck because of tax changes.

Another explained that there needed to be joined-up thinking across the industry to help even the smallest landlords. But, at present, the industry was not speaking with one voice.

He said: “There is a disparity between the advice from different facets of the industry – brokers, lawyers, lenders, accountants – so there is no clear pathway for a client to understand what the best advice actually is because the advice differs.”

Once again, the answer seemed to be greater collaboration, according to many of the attendees.

As one lender said: “The synergies between brokers, distributors and lenders need to be more joined up than ever.

“We’ve sat in a benign environment for years and the level of advice and support has been low. Now we have to be there to support clients wholeheartedly.”