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Why there is still opportunity in buy to let – Marketwatch

  • 28/11/2018
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Why there is still opportunity in buy to let – Marketwatch
The buy-to-let market has suffered a bruising couple of years at the hands of the government and regulators.


As a result, the purchase market has dramatically contracted, though remortgage business has been more robust.

Looking ahead, there are still opportunities in the market, according to some critics.

Three lenders explain why they are currently expanding in buy to let.


Maria Harris, director of intermediary lending, Atom Bank

Anyone would be forgiven for thinking that the buy-to-let market is in the final throes of a slow and painful demise but rumours of its early death may have been greatly exaggerated.

There’s no doubt that the volume and velocity of regulatory change has left the market gasping for breath.

But rather than giving up, we’re seeing portfolio and limited company landlords looking to reduce the pressure and give themselves some breathing space.

With the first tax returns under the new rules due to be filed by 31 January, it’s a prudent time to look at longer-term financial planning and to take some pragmatic decisions around cost management.

This could mean fixing payments to beyond 2022 to allow all of the tax changes to wash through, looking at ways to maximise the yield on existing stock, or purchasing additional properties across the regions where house price growth is more modest, but purchase prices are lower and yields are positive.

For experienced investors with stable portfolios and strong interest cover ratios, there remains a widespread choice of lenders in the remortgage and purchase markets.

We’re seeing more product choice and greater demand for simple, transparent, and good value products which challenger banks are well placed to deliver.

While we’re unlikely to see a return of the double-digit growth of previous years in the buy-to-let market, a reliable, secure and more professional market can only be a good thing for landlords, tenants, lenders and the private rental market generally.


Francesca Carlesi, chief executive, Molo Finance

Many perceive the buy-to-let mortgage sector to be full of doom and gloom.

Take a closer look, however, and it reveals interesting opportunities ahead.

As in any industry, structural changes tend to bring both threats and opportunities at once. Typically, the former challenges the traditional way of doing things and the latter opens up the way to innovation.

At Molo we believe the buy-to-let market is in a similar situation today.

The recent prudential and tax regime changes may have impacted on the growth and profitability of the sector significantly.

But they have already started reshaping the structure of the market.

Technology has made it possible to offer a higher level of service, lower overall costs and streamline


From that, innovative ways to access property ownership in a tax and time-efficient manner (e.g. the rise in limited companies buy to let and various investment schemes) have come to the fore.

Those players willing to adopt technology to reduce the overall cost to serve for buy-to-let lending while investing in service as a core proposition, are likely to be the ones that reshape the market, benefitting from continuous growth, deeper customer relationships and good profitability in spite of tough competition.

We have started our journey in this direction and want to contribute to this important market in the UK.

Technology is our key enabler and providing superior customer service is our mission.

We look forward to collaborating with our customers, other lenders, brokers, and other key players in the market to help shape the buy to let and mortgage future.


Andrew Asaam, director of mortgages, Virgin Money

The UK buy-to-let market has been through challenging times over recent years with changes to regulation and government policy contributing to a downward trend in the market.

According to our own research, the collective impact of the tax and stamp duty changes announced by government in 2015 and 2016 have had more of a detrimental effect on landlord confidence than the financial crisis.

Prior to the Autumn Budget announcement of 2015, landlords were three times more likely to have purchased property in the previous three months than sell.

By the second quarter of 2017 landlords were more likely to have offloaded property than purchased for the first time ever.

And worryingly, over the last six months a record one in 10 landlords claimed to have sold property.

At Virgin Money we believe that a strong rental sector is vital for the overall health of the UK housing market.

With home ownership still out of reach for many, private rental accommodation plays a crucial part in addressing the UK’s housing needs.

As a result, the expansion and development of our proposition recognises there are many types of buy-to-let landlords – with very different challenges and opportunities – as well as the changing market landscape.

For example, this year we launched our portfolio proposition, increased the maximum loan term from 25 to 35 years, extended the maximum age to 85 and lowered deposit requirements to help new landlords get a foot on the ladder.

The buy-to-let sector will continue to face challenges as it rides this transitional period.

However, we will play our part in helping landlords navigate the future by adapting and evolving our proposition to ensure that we meet the myriad needs of our buy-to-let customers.

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