It needs to be seen as more than a vote-winning, 'sugary pill', executive says
Housing policy is too often regarded by politicians as a short-term vote winner, without thought being given to the structural changes needed to meet the accommodation needs of the UK’s changing population, it’s suggested.
Richard Rowntree (pictured), managing director of mortgages at specialist lender Paragon Bank, calls on Westminster’s decision-makers to approach housing regulation proportionately.
He highlights too the resilience of the buy-to-let market, identifying a continuing demand for quality rentable accommodation.
“We would like politicians to adopt a balanced and proportionate approach to the regulation and taxation of the private rented sector, and to take a holistic view of the housing market,” Rowntree told Mortgage Introducer.
“Too often, housing policy is treated as a sugary pill, designed to win short-term votes without really addressing the structural changes that need to take place to housing provision to cater for our changing population.
“Put simply, population growth will outpace housing completions, so supply demand dynamics will only deteriorate in the coming years unless we build more homes and provide housing for a range of tenures, including tenants.”
Paragon Bank focuses on providing buy-to-let mortgages, savings products and commercial finance to customers who are underserved by the mainstream market. It has a long history of supporting portfolio landlords.
Its recent research suggests that 37% of landlords with four or more properties plan to increase the size of their portfolios this year, and the majority of them - 55% - will fund the purchases by releasing equity from other properties in their portfolio or using existing capital – some 58%.
How is the private rental sector performing?
The bank polled nearly 400 property landlords across the UK and found that 69% of them are adding property as part of a portfolio strategy expansion, 60% are driven by long-term demand for rental property, and 50% are doing so as part of their retirement plan.
“One of the most important segments of the private rented sector is the portfolio landlord,” Rowntree explained. “These landlords are not only the largest providers of rental accommodation in the UK, but also the most committed in their approach to property investment.
“Despite the challenges posed by the economic uncertainty, these landlords remain confident in the long-term prospects of the PRS (private rental sector) and their own lettings business. They see rental property as a reliable source of income, capital growth, and pension provision, and they plan to grow their portfolios by releasing equity from their existing properties and securing new finance.
“Some portfolio landlords are full-time professionals, while others are part-time investors with other sources of income. Some invest in a single area, while others diversify across regions and property types.”
Rowntree is impressed by the resilience and the adaptability of the buy-to-let market.
“There is still a strong demand for quality rental accommodation in the UK,” he reflected. “The BTL market has proven to be a valuable source of housing supply and a viable long-term investment for landlords, especially in the context of the limited supply of new homes. The BTL market also plays a vital role in supporting the wider economy, by providing employment, income and tax revenues.
Pointing to the complexity and dynamism of the market, Rowntree added: “It requires a high level of expertise and professionalism from landlords and lenders.”
After a turbulent few years for the economy, the Paragon Bank executive is hopeful about how 2024 is progressing.
“There are encouraging signs of optimism,” Rowntree said. “The economy has settled in more recent months, with inflation coming down and house prices stabilising. That has led to mortgage pricing improving and giving landlords a platform on which to look forward again, rather than being in the more defensive mode that we saw last year.”
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What impact do brokers have on a lender’s business?
Paragon’s relationship with brokers is key to its success and growth, Rowntree indicated.
“Brokers are our main distribution channel and our primary source of feedback and insight,” he reasoned. “They help us to reach and serve our target customers, who often have complex and diverse needs that require specialist advice and solutions. They also help us to communicate and demonstrate our value proposition, which is based on our service, products, and pricing.
“We value and appreciate the trust and loyalty that brokers have shown us over the years, and we are committed to supporting them in return. We are investing in our technology, processes, and people to ensure we deliver a fast, efficient, and consistent service to brokers and their clients. We have built a great broker-facing team, with the likes of Louisa Sedgwick, Jason Wilde and Sally Wright well-known to the broker community.”
He continued: “My top tip for brokers would be to embrace the opportunities and challenges that the year ahead will bring, and to leverage their strengths and skills to add value to their clients and partners. There are over 200,000 fixed buy-to-let mortgages due to renew this year and the easing of mortgage product pricing creates more opportunities there.”
With a career spanning three decades, and leadership and executive committee roles across six major UK banks, Rowntree has plenty of business wisdom to share.
“You are only as good as the people you surround yourself with,” he considered. “No matter how talented, smart, or experienced you are, you cannot achieve great results without a strong and supportive team. My role is to create the conditions where people belong and can reach their potential.
“Life-long learning is critical, especially in an ever-changing world. The skills and knowledge that brought you success in the past may not be enough for the future. You have to constantly update your abilities and adapt to new challenges.”
He concluded: “Be bold and never settle. There are always opportunities to grow, improve, and innovate. You must be proactive and seek them out, rather than waiting for them to come to you. You also have to be willing to take risks and learn from your failures.”
