PATIENCE REQUIRED AS BTL MARKET IS REIGNITED

In recent weeks I have spoken about the ways in which BTL lenders have been working hard behind the scenes to find alternative solutions to overcome ongoing valuation issues and restructure product ranges which better support landlords and the intermediary market. And this raft of planning was put into practice pretty much overnight as physical valuations were given the green light to proceed – albeit with safety measures and social distancing restrictions firmly in place to minimise any risks posed by Covid-19.

Inevitably, this was the trigger for a number of lenders to spring into action.  Apologies in advance if I miss any lenders off the list below, but it’s important to highlight those who have opened, or reopened, their doors as a result of this important turning point for the mortgage market. Not to mention the new product ranges on offer.

THE BUY TO LET WHEELS KEEP TURNING

Last month we sat on the cusp of a Budget and landlords everywhere were hoping for some respite after the raft of recent Government pressure in regard to taxes, policy and regulation. Little did I realise then just how fast our world would change over such a short space of time. Whilst the Government has maintained a focal point on the mortgage market, this is only one of many areas of concern for our nation. To re-cap, Chancellor Rishi Sunak announced that mortgage lenders will offer “at least” a three-month break from mortgage repayments for homeowners experiencing financial difficulties as a result of coronavirus. The Government then decided that residential buy-to-let (BTL) landlords are entitled to the same three-month mortgage repayment holiday as residential homeowners if they have tenants struggling to pay rent.

LENDERS, TECHNOLOGY AND THE INTERMEDIARY MARKET

I recently spoke on the Accord Mortgages Growth Series podcast and suggested that lenders should embrace technology to increase speed, efficiency and automation within the private rented sector.

The kind of technology we’re talking about requires a more joined-up approach, but as an industry we still appear to be lacking this to a certain extent. Now I’m certainly not backing away from this statement in any way, shape or form as technology is – and will continue to be – the major driving force of the modern mortgage market, although I’d also like to take this opportunity to play devil’s advocate and take a wider look at the relationship between lenders, technology and the intermediary market.

LOOKING TO THE FUTURE

As I was just about to start writing this piece an email flashed up in the bottom righthand corner of my computer screen. It was from my bank and had the subject line ‘How are you preparing for the future, Mr Tan?’ This was followed by the line ‘Take action today for a better tomorrow’.

This was both a very pertinent question and a particularly strong call to action, especially after I had just read some snippets of an OMS report: “Living longer: changes in housing tenure over time”. The report examines changes in housing tenure between 1993 and 2017 and what those changes might mean for older people in the future.

The main points from this being:

• Almost three-quarters of people aged 65 years and over in England own their home outright.

BUY TO LET IN 2020 – WHAT’S IN IT FOR BROKERS?

Does buy to let still present opportunities for brokers? What innovation does the future hold for this market? And what benefits are there for brokers looking to expand into this sector?

Listen in to the latest podcast from Accord Mortgages in which Ying Tan, Dynamo for Intermediaries’ founder and chief executive, is interviewed on all things buy to let by Chris Maggs, Senior Commercial Manager at Accord BTL.

https://blog.accordmortgages.com/podcast-35-buy-to-let-in-2020-whats-in-it-for-brokers 

NO TWO LANDLORDS ARE THE SAME

No two landlords are the same. There are those who fall into the ‘accidental’ landlord bracket and at the other end of the scale we have professional landlords who have built a business around their property portfolios. Somewhere in between, we have people who have purchased additional property for short-term investment/refurb purposes, for their children to live in when at university, to talk about at dinner parties and/or as part of a pension pot. In short there are many reasons why people have become landlords over the years.

EMBRACING THE TECH REVOLUTION

Since the turn of the year there has been a plethora of images all over social media showing photos of people comparing themselves from the start of the decade to the end of the decade.

This outpouring also reflects just how much social media and technology has dominated the 2010s. Instagram in particular has become a digital oasis for millennials and Gen-Zers to share more of their personal lives. After being acquired by Facebook in 2012, the photo-sharing network has grown to over a billion registered users as of last year. This makes it one of the most impressive growth businesses over the past decade and also home to a whole new way for individuals and companies to build brands and generate income.

A POSITIVE 2020 FOR BUY-TO-LET…?

Around this time last year, I completed a search on relevant BTL news and quickly noticed a pattern which kept diverting me to the same website – a provider of financial advice for investors.

I remember being somewhat taken aback at the sheer volume of articles produced around a similar topic which included “forget buy-to-let” (as an investment vehicle in 2019) in the headlines or words to that effect.

When embarking upon a repeat search just now, similar phrasing and headlines were still visible but the volume of such articles on the first three pages of the Google search engine was noticeably fewer.

So, what can we take from that?

TRACKING THE TRENDS FOR BUY-TO-LET

Last month I looked at how the value attached to the advice process should never be underestimated. This was alongside the importance of intermediaries getting to grips with the varying challenges facing landlords and the potential raft of buy-to-let solutions on offer.

A strong component within this is maintaining a wider knowledge base and keeping track of trends along the way. Of course, this isn’t always easy, and it remains the responsibility of landlord clients to undertake their own research and due diligence before entering into any purchase or remortgage.

However, good advice and adding value – even if it’s simply pointing them in the direction of relevant articles, news stories or reports in the trade press – can often be the difference between a one-off customer and a long-term client.

HOW MANY LANDLORDS HAVE REALLY GOT TO GRIPS WITH THE LATEST REFORMS?

I recently noticed a headline ‘UK landlords failing to keep pace with PRS reforms’, which made me wonder just how many landlords are still either ignoring, or are unaware of, legislative and policy reforms throughout the UK rental market.

Whilst reflecting on this, it seems apt to reaffirm some of these changes.

Mortgage interest tax relief

Mortgage interest tax relief will continue to be phased out. Landlords are no longer able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs. For the 2019–20 tax year, landlords will only be able to deduct 25 per cent of their mortgage interest. And from April 2020, they won’t be able to deduct any.

Lettings fee ban

Pages