Optimism in specialist lending market despite Stamp Duty changes

  • 26/05/2016
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Optimism in specialist lending market despite Stamp Duty changes
Specialist lenders are optimistic for the future of the sector, despite concerns about the impact of buy-to-let Stamp Duty rises.

The Vantage Point report, compiled by Vantage Finance, carried out a study of 32 specialist lenders, focusing on their experience and views of finance for buy to let, refurbishment, development, auction, bridging, houses of multiple occupation (HMOs), limited company buy to let and holiday lets.

Over 50% of lenders reported an increase in lending volumes in all applicable areas, with the exception of holiday lets. Development finance scored particularly highly with 90% having seen growth in the half year, followed by 89% in bridging, 88% in refurbishment finance and 87% in limited company buy-to-let finance.

When asked to evaluate what they saw as the biggest threat to the market in the next six months, nearly a third (31%) of lenders saw changes to buy-to-let Stamp Duty as the biggest threat, whilst 29% saw legislative changes as the biggest concern.

Despite the threat of buy-to-let Stamp Duty, only 13% of lenders had seen a decrease in the number of smaller landlords seeking finance over the last six months, suggesting that any significant effects from the stamp duty change are yet to be felt.

Some 59% of lenders, did not expect to see a rise in interest rates in the next 24 months and 30% said it wouldn’t happen in the foreseeable future.

The majority, 83%, of lenders expected property prices to continue rising over the next 12 months.

Lenders were also asked to choose which region in the UK they expect to see the biggest increase in property investment over the next year, with the South East scoring highest at 48%. London scored particularly low with only 7%.

Product innovation was seen as the clear front-runner for market opportunity in the next 12 months. Further market transparency and new customers entering the market were the joint-second most popular choices, each receiving 14% of the total responses. Comments around this question also identified increased opportunities for firms that are not regulated by the PRA, as underwriting requirements become more stringent.

“Innovation that can continue to grow the range of needs that specialist lending products can satisfy must be an important foundation for growth. It’s not simply about launching new products, but adopting a flexible approach to lending,” Stephen Wasserman, managing director of West One Loans said in the report.

Lenders were asked to individually rank different qualities they look for when considering broker partners by importance and 41% ranked experience as the most important quality, whilst 31% ranked quality of applications as number one.

Lucy Hodge (pictured), managing director of Vantage FInance said it’s essential that lenders prioritise quality over quantity to ensure responsible lending and sustainable growth.

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