Keep educating clients about buy-to-let – the appetite is still there
John Phillips is group operations director at Just Mortgages and Spicerhaart
As we all know, buy-to-let is now a lot more challenging for brokers. Gone are the days when a broker could just pull out a calculator and work out how much a landlord could borrow.
In the post-PRA world, brokers now have to gather a huge amount of additional information the landlord’s property portfolio as well as their business plan and cashflow statements, before they can even start to think about LTVs.
And that is all assuming the landlord is aware of the changes, many landlords themselves still have a lack of understanding around why lenders need so much more information than they did before.
While the topic has been covered frequently in the trade press since the rules were introduced five months ago, there has been relatively little about the changes in the consumer press. Therefore, many borrowers are unaware of the changes until they actually come to remortgage or buy add another property to their portfolios.
This means many are taken aback when their broker then explains to them how much information they now need to provide, and how much extra time is needed to put together a buy-to-let mortgage application. And actually, even those who do know about the changes might not know quite the impact all the extra information needed will have.
There are even some lenders who are not sure about all the information they need themselves and therefore, even when all the information has been provided, applications are taking a lot longer than they used to. Brokers are also finding that different lenders are asking for the information in different formats, creating even more work for brokers.
While in the main, brokers know about the changes, for those who only occasionally deal with clients with portfolios of properties, the extra information required can seem as incomprehensible to them as it does to their clients.
And this is then compounded by the fact many reports are suggesting that landlords are ‘selling up on masse’ as a result of the changes so there is little buy-to-let business around away.
However, we have not seen any evidence of this, and in any case, I think we need to give landlords more credit.
Landlords are not going to sell up just because of a few changes to tax rules, most will take a much more pragmatic approach. And even those who do sell up, it is more than likely another landlord will take on the property anyway.
We know that for many brokers, the extra time and effort needed to put together a buy-to-let application may put them off, but the reality is, there is still a huge appetite out there for buy-to-let, and we are working hard to support all our brokers to enable them to keep writing good quality buy-to-let business.