BTL lender urges greater speed to secure a deal
Brokers should be able to expect the same level of urgency from lenders that they offer their own clients, according to Landbay, as it warns that speed and efficiency can make or break a deal.
The buy-to-let lender believes its competitors will be watching closely to see how its recently-integrated automated valuation model (AVM) fares – and whether they should follow suit.
An AVM utilises property and transactions data, as well as statistical modelling, to determine property and rental value. Rather than relying solely on physical or even drive-by valuations, Landbay integrates this real-time data and market intelligence, with the aim of significantly speeding up its time to offer.
Its sales and distribution director, Rob Stanton, told Mortgage Introducer: “Brokers always act with real urgency to support their landlord clients and there’s no reason why they shouldn’t expect that same level of commitment from lenders.
“Our new AVM product range is designed to make the mortgage process as efficient as possible for both the broker and the borrower, all while providing options that support landlords of all sizes and requirements. The range is available with our variable fee structure too, which continues to provide a valuable mechanism to help maximise borrowing potential.”
He explained: “Over the past 18 months, we have seen the importance of speed and efficiency across the mortgage process – it can make or break the deal.
“Before launching to the whole of market, we conducted an extensive pilot which generated some fantastic results. The main takeaway was that our speed to offer was, on average, three times faster than a standard application. In fact, we even had examples during the pilot where we were able to make an offer within 24 hours of the decision in principle.”
What makes AVMs successful?
AVMs are available on a standalone range of five-year fixed rate products, with a maximum property value of £750,000 at 70% loan-to-value. The success of Landbay’s initiative will be measured in its ability to consistently reduce offer times for borrowers, as well as providing a clear cost saving – and if there’s demand to and scope to expand its offering still further.
“Lenders are always looking at ways to innovate to help their broker partners support their landlord clients,” Stanton noted. “I’m sure there will be those watching our product range carefully to determine whether they should follow us down the path of AVMs. While it may not suit every property or portfolio, our preliminary findings and results have been incredibly positive.
“We have found that by using an AVM, applicants can save on average £500 due to the fact that they do not have to pay any valuation fees. As part of our extensive pilot, we saw one example where a borrower saved as much as £4,000 in valuation fees across their portfolio. With massive pressures on landlords coming from all fronts, this is a significant saving.”
Landbay aims to support borrowers, from individuals to limited companies and first-time landlords, covering standard properties, houses in multiple occupation (HMOs), multi-unit freehold blocks (MUFBs) and properties adjacent or above commercial premises.
“A key differentiator for us has always been the synergy between our technology and bespoke broker portal, and the expertise of our in-house team and BDMs out on the road,” considered Stanton. Our technology enables us to stay close to the ground and respond rapidly to changing market conditions, identifying and introducing new products.”
Integrating AVMs is a continuation of its ethos, Stanton believes, leveraging both its in-house technology and its partnerships with leading data providers.
“If the application doesn’t qualify for an AVM product, rather than rejecting it and starting again, the applicant will be swapped over to an equivalent standard product,” he stated.
How will the buy-to-let market perform in 2024?
Stanton, who has been with Landbay for just over five years, remains optimistic about the year ahead.
“We’ve certainly seen enough positive indicators to suggest that 2024 could be a positive year for buy-to-let and the wider mortgage market in general,” he reflected. “There are still some unknowns however, especially with an upcoming election, while many will be hoping both the economy and the market avoids any significant external shocks. However, confidence is certainly starting to return to the market and lenders such as Landbay are playing their part to help in that process.
“In terms of buy-to-let, there’s no question that the current climate has created valuable investment opportunities across the country. Proactive landlords are seizing this opportunity to buy at a competitive price, which only helps with the potential yield. With affordability the way it is, especially in the residential sector, there will always be a need for decent landlords and good quality rental properties.”
People have been too quick to dismiss the buy-to-let market, Stanton believes.
“Across its 30-plus year history, there’s been countless people ready to write off the sector and bemoan its challenges, despite the fact it has not only survived countless regulation and government changes and crises, it continues to thrive,” he commented. “There is no question it is harder to be a landlord with the current tax regime and the higher interest rate environment we find ourselves in.
“Nonetheless, buy-to-let lenders, including Landbay, have not been shy in reducing rates amid stabilising swap rates. Alongside this, efforts continue to support borrowers in meeting tougher affordability requirements – with our variable fee structure being a good example. While recent inflation news will have caused a stir, the expectation remains that we could still see some movement in the base rate later this year, which will help support lenders’ efforts. Above all, lenders remain ready to lend, brokers are ready to help and tenants are on the hunt for rental properties.”
