Buy-to-let clients - what needs to be done

Matthew Rowne (pictured) joined The Buy to Let Broker (TBTLB) in 2013 with business partner, founder, and fellow director Matt Hardman after more than two decades working in the mortgage industry.

Rowne’s shift to the buy-to-let sector was prompted by wishing to make specialist professional advice within the complex sphere of Buy to Let scalable, and available to landlords nationally.

TBTLB’s primarily works in tandem with high net worth clients, chiefly company owners with large property portfolios, although they cater to all landlords, whatever the stage of their journey.

The firm has since become recognised as specialists in the field, according to Rowne, due to the increasing complexity of the professional landlord’s business model – the result of a host of governmental and legislative changes introduced over recent years, which have impacted heavily on landlords, including the scrapping of tax relief on mortgage interest payments tapered in over recent years.

“We just wanted to make sure that we were as knowledgeable we could be in that sphere, and as a result of our service, client-centric focus, we’ve continued to steal market share,” Rowne said.

The firm’s services include bridging finance, commercial development, HMO, MUFB, Limited Co and indeed residential mortgages, although the latter, clearly, is not TBTLB’s core business.

One of the biggest challenges facing Rowne’s company will be to ensure landlords’ properties comply with EPC scores in line with the Government’s intended target of raising the certification rating to a ‘C’ by 2025.

According to Rowne, there are an estimated 3.2 million properties in the PRS (Private Rented Sector) that would currently fail to reach the required band, and given that the government estimates are that it will cost circa £10,000 on average to refurbish/improve these properties to the required standard, (a figure that Rowne believes to be woefully conservative), the scale of the task becomes clearer.

A 2020 study conducted by German technology company Tado concluded that UK homes were losing heat up to three times faster than European properties, partly due to the fact that 38% of the UK’s housing stock was built before 1946.

And more recently, the Royal Institute of British Architects (RIBA) raised the issue of England’s 3.3m interwar homes, calling for policies to incentivise private owners, who reportedly own more than 70% of these properties, to fund the installation of insulation, double or triple-glazing and replace old gas boilers, which the professional body estimated could cost £38 billion.

Rowne agreed on the importance of having a more eco-friendly industry and that lenders should be encouraged to play an active role.

He said: “From a brokerage's perspective, it’s important we educate the client in the advice process about what needs to be done. Due to our demographic of clients, many of our landlords are actually already aware of that, but it’s also important that we continue to raise awareness about the needs moving forwards, and indeed the likely disparity of finance costs for those that do not make the necessary improvements to the properties in their portfolio moving forwards.

“Whereas I do not believe that it is ultimately the lenders’ responsibility, I do feel that they have a huge part to play, as even those landlords that are not keen to make the changes immediately, will potentially be persuaded by the more cost-effective finance available on Buy to Let for properties that achieve an EPC of C or above (already emphasised by the products sitting at the top of the sourcing systems).

However, he added that if the government wanted to get close to hitting its targets, the mortgage industry “would have to have to continue to innovate, and brokerages will have to take their share of the burden in respect of client education - it’s a huge challenge.”

Now that the country appears to be emerging from the pandemic, Rowne was asked about the availability of properties for conversion and how this would help with stock.

“We’ve already seen many more conversions from commercial to residential and change of use,” he said. “With many businesses now operating a hybrid working environment, this is a trend that we expect to continue.”

Having followed in his father’s footsteps as a mortgage broker, Rowne said his ethos had always been acutely focussed on service and client relationships.

“At The Buy to Let Broker, we talk about relationships that transcend business, and the focus that we put into the relationship we are privileged to enjoy with our clients is huge,” he said. “It’s a big part of what we do. And there is huge job satisfaction in working in tandem with clients from when they’re buying that first buy-to-let to owning substantial property portfolios, contributing to the much needed PRS provides enormous satisfaction.”