With the BTL industry experiencing an increase in the number of experienced landlords, it was claimed that the BTL market is segmenting, with two factions emerging –
professional landlords and amateur landlords.
Although it would seem the industry is currently able to meet the needs of BTL borrowers on a case-by-case basis, more is needed to be done to meet the needs of landlords with medium to large BTL property portfolios.
Guy Garrard, sales director at Rooftop Mortgages, commented: “The challenge for the market is to develop a way of lending based on underwriting a landlord’s portfolio rather than underwriting on an individual property. The BTL market is changing rapidly in terms of criteria with lenders’ products not as sophisticated as they could be, demonstrated by affordability.”
Garrard said that calculating affordability using a cross subsidiary of rental income could be a viable way forward. He explained that this would be a logical step forward and would foil the way commercial mortgages have always been done.
However, Christopher May, managing director of The Mortgage Times Group said: “Although many lenders are talking about lending on this basis, a problem arises if not all the properties in a portfolio are making a good return and do not remain with the same lender. A lender could be left with the weaker properties of a landlord’s portfolio.”
Martin Wade, director at Mortgage Options, commented: “Portfolio underwriting would make a lot of sense based on an amalgamation of loans and loan-to-values, as long as the risks for the lender are eliminated by checking the mortgage ability of each individual property.”
