In my opinion, there are few mortgage market sectors as intriguing as buy-to-let, and few which can conjure up such strong reactions, while at the same being such an essential part of the UK housing market.
I’ve lost count of the number of times it has been written off for a whole host of reasons. Its ‘death’ has been foretold on countless occasions and yet here it is, thriving, and showing no sign of being placed six feet under as some detractors would no doubt like.
As we move further into 2022, buy-to-let is likely to be as important as it’s ever been, and though landlords in particular have had to deal with all manner of economic, regulatory and taxation challenges, they continue to seek out opportunities, to professionalise, and to meet the growing demand for quality properties from tenants.
The professional and the portfolio
Those strong private rental sector foundations ensure landlords continue to want purchase and remortgage advice, and why increasingly they are wanting advisers who fully understand the sector and its growing array of complexities.
The shift that moved buy-to-let towards the professional and the portfolio continues to play out, and we see that in the increased use of limited company vehicles, the increased geographical spread of properties within a portfolio, the increase in HMO/MUB usage, etc, as landlords seek the rental yield to maintain the profitability and to benefit from the capital growth.
That has meant a more specialist lending community serving these borrowers, and that shows no sign of slowing up, with the rumour mill working overtime that 2022 will see perhaps half a dozen new buy-to-let lenders entering the market.
We’re aware of the work that is going on at a number of organisations as they prepare for a launch, and it will be exciting to welcome new players into the market this year, especially as greater levels of product choice can only be good news for landlord borrowers.
I’m aware that some will ask questions about whether any more new buy-to-let lenders are required, particularly in that specialist space. My answer is that the market will decide and in recent years we’ve seen a huge amount of competition already which hasn’t stopped others from following, or indeed existing lenders who were previously not involved in the sector, branching into it.
We’ve also seen existing buy-to-let lenders further their geographical reach, and again, this can only help both advisers and their landlord clients in terms of product choice, particularly in the huge market area beyond the ‘vanilla’.
Keeping existing players on their toes
Do new buy-to-let lenders have to bring something different? It’s certainly not going to harm their launch if they do. What might that be? Price, broader criteria, technology, digital know-how, service quality, distributor engagement, all of the above?
What I suspect advisers won’t want to see is a proposition that uses buy-to-let as a steppingstone and doesn’t seem that bothered about the quality of its products/criteria, etc, because it has plans for ‘bigger and better’ things down the line.
Many lenders have used buy-to-let as a gateway and I guarantee that all of them have quickly recognised that, to build a reputation and to get buy-in from advisers, they have had to be on top of their game. Those that haven’t, will have suffered the consequences.
Overall, it’s good to see the buy-to-let market in good health. New lenders often provide a further impetus, and they keep the existing players on their toes. That tends to mean an improvement all round, which will suit advisers and their clients, especially in what promises to be a strong year particularly for remortgage activity, but also landlords using their equity in order to purchase more.
Let’s see what the newbies can offer, and let’s see how the established players respond.