There are positive signs that confidence is returning to the property market.
Adrian Moloney (pictured) is sales director at OneSavings Bank
Following the recent period of political and economic uncertainty, there are positive signs that confidence is returning to the property market.
For example, house prices rose to 4.1% annually in January 2020, according to the latest Halifax report on house prices and the market seems to be talking of increased activity as buyers look to capitalise on the competitive mortgage products currently available.
There have been other signs as well, for instance, the typical cost of 5 year fixed-rate buy-to-let mortgages has fallen in recent years.
Research from Moneyfacts found that average rates charged on 2 and 5-year fixed rate buy to let mortgages have fallen by more than 0.25% year on year since 2015.
According to Moneyfacts’ data, a landlord coming to the end of their 5-year fixed term in 2020 will find that the average rate has dropped by 1.19% since they first took out the mortgage.
In short, conditions are looking favourable for your landlord clients, particularly those who are looking to grow their portfolios in 2020, so now could be a good time to review your client lists and link in with your specialist business development managers to make sure you are up to date with the product ranges, criteria and rates currently available.
In addition, rental growth is picking up across the country, primarily in the South East.
According to letting agents Homelet’s Rental Index, UK rents increased by 2.3% in the year to January 2020, and rents are predicted to rise even further in 2020.
Favourable fees for 5-year fixed-rate buy to let mortgages and the prospect of good rental yields in the future aren’t the only reasons why a landlord may be thinking about adding to their property portfolio this year.
Another key consideration will be the Chancellor’s upcoming Budget.
While it’s true that the Conservative Party manifesto was largely quiet on any changes to buy to let, landlords will still be paying close attention to what happens on 11 March in case there are any surprises.
Perhaps you have clients who are planning to buy their next property through a limited company structure?
Since April 2017, when the tax relief on mortgage interest started being phased out, the market began to see the number of limited companies increasing. Analysis of Kent Reliance for Intermediaries’ data shows that in the first quarter of 2019, 72% of buy-to-let mortgage applications were made through a limited company.
Brokers who already have established relationships with specialist lenders will be better placed to support their landlord clients, who may be planning to buy via a limited company structure.
In this increasingly professional market, brokers have a key role to play in advising their clients on the specialist finance available. But don’t forget that it’s not only rate you should be looking for on behalf of your clients.
You should be looking to place business with a trusted specialist lender with a strong service commitment to ensure you’re getting the best fit for your client’s needs – no matter how odd or complex the case may be.
On a final related note, according to data from the latest Savanta Mortgage Intermediary Survey H2 2019, Kent Reliance for Intermediaries has the most flexible criteria in the market and received the highest score for using common sense on decisions, giving you a couple more reasons to get in touch to discuss your client’s needs and in turn helping to grow your business further.
