Bob Young is managing director of CHL Mortgages
As this is my last blog of the year it seems pertinent to have a quick review of the last twelve months and to set out some thoughts on what 2014 will bring for all of us, particularly those that are active in the buy-to-let sector.
First up, it has undoubtedly been a positive year for buy-to-let lending, and hopefully for brokers, buy-to-let advising.
Even with a few weeks left of the year to run it’s quite obvious that lending levels are going to surpass those of 2012 – indeed if we’re looking at a historical comparison we would probably have to go back to the middle of 2008 to see similar levels.
From this point post-Credit Crunch, and with the global recession just about to get going, we saw a considerable drop-off in lending however now the movement appears to be going in one direction, upwards.
The sustainability of such increases remains to be seen and while I suspect 2014 will continue to see increased lending levels we may see a quarterly plateau-ing out at the end of next year.
This means that I expect total buy-to-let lending over the next 12 months to improve however I’m not sure it will be at some of the optimistic ends of the scale. Those of a bullish persuasion (Mortgages for Business, for example) are already predicting a 25% uplift in lending next year compared to this which would take us up towards the £25-plus billion mark. Let’s hope David Whittaker is right.
What we can say however is that I suspect a number of new (and returning) lenders will be offering buy-to-let products next year which can only be good news for brokers and their clients.
Particularly as all the research suggests that, existing landlords, will actively want to add to their portfolios in the coming months and clearly (for the most part) they will need to be able to access finance in order to achieve these ambitions.
Competition, as long as it remains within the scope of responsible lending, is good news for all stakeholders. While many might like this growth in product availability to be combined with a relaxation of lending criteria I would hope that my colleagues in the lending fraternity do not forget the lessons of the recent past.
Strong requirements in terms of deposit/equity levels, rental cover and the like, do not need to be jettisoned in order to chase business. I have become something of a broken record on this point, but it will do no-one involved in our sector any good for lenders to be involved in a chase up the risk curve during 2014.
A number of people, mainly within the mainstream press, appear to have got themselves into a froth when it comes to the future of buy-to-let lending and the private rental sector in general.
This has been as a result of the government’s Help to Buy scheme which will apparently (according to some) take a whole generation of renters out of our sector and make them homeowners overnight.
Nothing could be further from the truth and, while some will now be able to purchase their first home, there are still many, many people who either need to rent or will continue to choose to rent. Demand in the private rental sector, in my opinion, is likely to remain high.
Which leads me to conclude that, given a steady hand on the tiller, we can all look forward to the good ship buy-to-let continuing to sail a positive course in the year ahead.
From our perspective it is our sincere hope that we will be playing a full part in the market during that period and we are working hard behind the scenes in order to make this happen.
More news will follow as and when it is appropriate but rest assured we are looking forward to working with our broker partners again.
And that leads me simply to say that I hope you have enjoyed a productive and profitable year and there is much more of the same to follow in 2014. Don’t forget to enjoy the holiday break and New Year celebrations and I will reconnect with you all again in January.