The importance of the private rented sector within the wider housing market is no secret for anyone operating in and around the UK mortgage market but the reality is that it continues to come under increasing pressure with very little respite in store.
This pressure has implications for all landlords and it has certainly resulted in a far more complex marketplace. As such, current activity is being dominated by the more professional end of the landlord spectrum. With even the most experienced of these landlords leaning heavily on the intermediary market to ensure they have access to the right lender and products to meet their ever-shifting demands.
A significant driving force behind this need for advice is the rise in borrowing costs and the ability to meet affordability barriers. Inevitably, these barriers are forcing landlords – large and small – to review their financial position and that of their portfolios. Often forcing them into a decision of whether to hold on or to sell off. While this does paint a somewhat bleak picture, there is some positive news as sentiment remains high for a large majority of landlords going into the New Year
According to the latest research from TML, 74% of residential buy-to-let landlords feel confident about the performance of the property market over the next 12 months, with 27% feeling very confident. Confidence in the future of the property market peaked for those landlords that predominantly owned homes of multiple occupancy at 86%, student accommodation landlords (84%) and portfolio landlords with more than five properties (82%).
Such data should prove a welcomed shot in the arm for an intermediary market which is chomping at the bit to have a fully functioning BTL sector and to seize on opportunities to engage with a variety of landlords. For proactive advisers, there is no time like the present to reach out to those clients to demonstrate their value as there are landlords out there who may have had problems keeping up payments and maintaining a strong credit profile over the past 12 to 18 months.
In order for advisers to seize opportunities, it’s vital to develop a strong understanding of how specialist lenders operate and the variety of products on offer to be able to maximise these conversions and help clients to better understand the current financial marketplace. And let me reiterate that there are products out there for landlords who may require a credit impaired offering, provided advisers know where to look.
As a packager, this means having the right lenders on our panel and being able to support even the most complicated transaction from application right through to completion. After all, it’s not all about headline rate. It’s about taking into account product fees, affordability, valuation type, AVM’s, dual solicitor opportunities. Basically all factors with can benefit borrowers in different ways.
In terms of other areas which may help you stand out from other advisers, there is an opportunity to really focus on concerns around EPC requirements and the renter reform bill which comes into effect in October this year. All of which means becoming more of a consultant rather than focusing solely on product delivery.
Working closely with lenders and specialist packagers, such as Envelop, can help even the most established advisers to build a wider knowledge base and have a full support offering on hand to guide them and their clients through every step of such a multifaceted journey. And with an increasing number of specialist opportunities set to emerge in 2024, this is an area which advisers can ill-afford to ignore.
Donna Wells, Managing Director at Envelop