The announcement comes just three weeks after MI revealed A&L’s plan of extensive changes to its mortgage range and the way it deals with brokers come April 2006, highlighting an entry into buy-to-let as one of these areas of change.
A&L has denied its decision to enter the buy-to-let market is a U-turn on its low-risk lending strategy but has highlighted the new pension rules as an area which will bring further stability to the sector.
Sally Lauder, press manager at A&L, commented: “As we announced in our interim results we can confirm we are preparing to enter the buy-to-let sector next year. We feel that it will soon be appropriate for us to enter this sector as it is stabilising and developing into a mainstream market within the overall main residential market.”
“We will be concentrating on lending to good quality applicants, for example, professional landlords with proven track records. Naturally the extension of SIPPs in the spring of next year will further help establish buy-to-let as a stable and mature sub-section of the housing market. We will continue to lend prudently and responsibly as we diversify into this market,” she added.
Chris Ollerenshaw, group chairman at black&white.co.uk, said: “It’s an interesting move and seems to be following the increasing trend of lenders moving into this sector.
With regulation still affecting business this sounds like a move to get more volume through its books. A&L has the clout to have an impact in the market and as long as it delivers strong, competitive products it will be a good thing for the broker.”
Jeff Knight, head of marketing services at GMAC-RFC, said it was more surprising A&L had not entered the buy-to-let market earlier. He said: “Buy-to-let offers great opportunities for lenders. It’s edging towards the mainstream as more brokers and providers better understand the dynamics of this sector.”
l A&L announced healthy interim results for the six months ended 30 June 2005. Gross mortgage lending was £4.1 billion, an estimated market share of 3.2 per cent. Net lending was £1.6 billion, an estimated market share of 3.8 per cent.
Mortgage asset quality ‘remains good’ with 0.68 per cent of accounts in arrears at the end of June 2005, the same as at the end of 2004 and lower than the Council of Mortgage Lenders industry average of 0.88 per cent.
Richard Pym, group chief executive at A&L, said: “Alliance & Leicester has had a good first half year. We have delivered satisfactory financial results and grown our core businesses in slowing markets, maintaining a return on capital of over 21 per cent for our shareholders and improving cost efficiency.
“Over the past few years our strategy has established a strong, growing balance sheet, excellent asset quality and good cost control. Over the next few years the pace of change will increase as we continue to develop.”
