Over the last few weeks we have seen vanilla buy to let lenders race to the bottom on price and increase proc fees in an attempt to grab market share and hit end of year lending targets.
Even our own lending brand, Keystone Buy to Let Mortgages, reduced its loan term trackers recently and our products are criteria rather than price-led.
There has been a lot of talk also of lenders gearing up for the remortgage market.
Speculation of when Bank Rate will increase continues and stock market reversals both here and in the USA, coupled with reduced inflationary pressures, may push it further way but I do not see landlords moving en masse from low reversion rates until we actually see the first rate rise.
The drop in rates in the amateur landlord market is welcome but as buy to let brokers know, many transactions are not just about price.
Criteria is just as important and having strong relationships with more commercially minded lenders (or specialist distributors) is key for any broker looking to make the most of a growing market.
Despite a strong buy to let market there are landlords out there who are still struggling to meet the criteria for a buy to let mortgage which is making it very difficult for them to expand their portfolios.
Typically they fail not just because of non-standard properties/tenants and ownership structures but also because they have untidy credit profiles, sometimes through no fault of their own.
Discussing this issue with the Lancashire Mortgage Corporation recently we hit upon a solution. With LMC providing the funding, we’ve designed a suite of medium term loans called the Keystone Solutions Range, it offers a selection of three year fixed rate products to landlords who are struggling to get a buy to let mortgage now but, crucially, will be in a position to refinance (or repay the loan) in three years’ time. With rates starting from 8.49% for individuals and 8.99% for limited companies, it’s certainly a more progressive and cost-effective solution than bridging.
The lending criteria is also very flexible – more of a custom-fit approach to underwriting. Launched just a couple of weeks ago, it’s already proving very popular with brokers and their clients and we already have a number of applications underway.
As property investment grows and the market becomes more sophisticated, it is those brokers who stay in touch will all aspects of the professional landlord market, who will succeed.
This means also staying in touch with legislation e.g. selective licensing, HMO rules, Ltd Co tax treatment - I could go on.
One key piece of legislation that we are talking to landlords about now is the Energy Performance Certificate (EPC) law coming in to play in April 2018. It might sound a long way away but good landlords should be thinking about it now.
In a nutshell, under the 2011 Energy Act, from April 2018 it will be unlawful to let a residential or commercial property with an EPC Rating of F or G.
Whilst this will, in my opinion, have a greater effect on the commercial property market, landlords need to start thinking now whether refurbishments are required before April 2018.
While we wait for the Government to publish specifics, we are recommending to landlords that they:
• Review their property portfolio and ascertain which properties have an EPC
• Check for properties with an F & G Rating
• Find out what is causing the low rating
• Carry out remedial works now – energy efficiency works are bound to be more expensive as we approach 2018
• Take maximum advantage of enhanced capital allowances available for certain energy-efficient equipment.
Oh the joys of being a landlord!