Getting housing policy correct is a complicated task but it is important that buy-to-let does not become a political football
A lot can happen in a month and, since I wrote my previous column, the political landscape in the UK has fundamentally shifted. Have no doubt – this will significantly impact the housing and mortgage market.
Jeremy Corbyn won a landslide election to become the opposition leader and, with it, the Labour Party has lurched to the left.
This has given the Conservatives a chance to move in a similar direction and potentially win votes they would not normally have a hope of winning. The opportunity has not been lost on the party and we can already see the centre ground being taken with the introduction of new policies on the minimum wage and first-time buyers, and the promise of an assault on poverty.
At the same time, buy-to-let landlords have received a rather less positive message in that they will have to deal with an increase in taxation on their rental property profits, as well as the Financial Policy Committee pursuing powers of direction over the market, to which the Chancellor has given his tacit approval.
It is difficult at this stage to figure out whether these changes are a calculated political move on landlords, who are likely to vote Tory come what may.
Is it a populist move reacting to the negative media coverage of buy-to-let landlords over the past few years, blaming them for rising house prices and the plight of first-time buyers?
Or is it purely a move to protect the financial stability of the economy, as described by Bank of England governor Mark Carney?
Only time will tell. In the meantime, the industry should be focused on ensuring policymakers have all the facts at hand so that the correct decisions can be made and the law of unintended consequences does not overwhelm the good intentions.
Some would argue there has been substantial growth in the buy-to-let mortgage market over the past few years. Indeed, when you look at the percentage growth, there is no doubt it has grown much more quickly than residential mortgage lending, for example.
However, on an absolute basis, the buy-to-let mortgage market this year will be significantly smaller than it was in 2006 and only marginally bigger than it was 10 years ago.
Is the buy-to-let market being driven by lender appetite or by consumer demand?
The answer to that is obvious. The UK population has grown considerably over the past 10 years so more housing stock is needed. At the same time, it has become much more difficult for first-time buyers to get on the property ladder, meaning people are renting for longer.
Many hold the view that landlords have not only provided additional rental stock but have also significantly improved its quality. We can clearly see social housing stock has been in decline for more than a generation and it is also pretty clear private landlords have plugged some of the gap.
If landlords are disincentivised or curtailed in some way, we may end up with less supply of private rental property. Considering we are without a mechanism to replace that supply, this would not seem logical in a market with rising demand.
The changes to planning permission that allow housebuilders to sell their affordable stock instead of renting it out may also reduce the supply of rental property.
I appreciate that getting our housing policy correct is a very complicated task. However, I am keen to see that the buy-to-let market does not become a political football and that the FPC consultation is fully furnished with the facts so that we continue to have a market that meets the needs of all stakeholders.
Precise Mortgages, the specialist lender, has improved its criteria for landlords with multiple properties.
The changes, will see the number of buy-to-let loans each landlord can secure with Precise Mortgages double from five to 10, and the combined value of lending increase from £2 to £5million. The changes will offer greater flexibility and will come as welcome news to landlords that see property as a significant factor in their retirement planning.
Research commissioned by Precise Mortgages, in conjunction with YouGov, found that four in 10 (40%) landlords who expressed an opinion see their property portfolio as a long term investment, with just over one in 10 (11%) planning to keep their portfolio until they retire and a further 28% intending to keep their portfolio beyond their retirement.
Key changes to Precise Mortgages proposition are:
• Number of buy-to-let loans with Precise Mortgages increased from five to 10
• Maximum combined value of lending with Precise Mortgages increased from £2m to £5m
• Removal of the restriction on the number of loans larger than £1m that can be held within Precise Mortgages
• Loans available up to 80% LTV including new build flats
• Lifetime trackers and five year fixed rates with rental calculation based on pay rate
Alan Cleary, Managing Director of Precise Mortgages says: “As can be seen from our research many people use property as part of their retirement planning. Our latest criteria changes will help landlords build their portfolios. The private rental sector desperately needs additional housing stock so by enabling landlords to increase their portfolios these improvements also benefit tenants.”
Further product information can be found at www.precisemortgages.co.uk
Simon Carr, Sales Development Director
Have I ever mentioned our specialist new build, residential and buy-to-let mortgage products to you? Right now, I guess you’re thinking - new build - haven't builders stopped building new homes? Hasn't demand for new homes dried up? That’s not the case at all. In fact it's looking strong and full of opportunity.
Next I'm going to read your mind... Ready? Here goes... Hang on, it’s coming through... That's it! You’ve thought of at least two developments you’ve noticed only this week, and I'm guessing that you disregarded the opportunity without so much as a second thought.
Let me relight your fire with some fairly significant improvements we've just made, and it will hopefully prompt you to take a look at our product ranges to find out more.
It's a fairly closed shop by the way, limited to a handful of high street lenders who dominate the new build market.
The new build domination leaves many customers’ hopes and dreams shattered simply because a historic problem is still considered by many lenders as taboo - leaving customers tarnished forever, cast out, never to borrow again. Of course, I'm talking about the credit crunch, remember it? The credit crunch was an unprecedented event that sent ripples throughout the UK. Many customers, through no fault of their own, were affected by those times. Job uncertainties and lower household incomes naturally led to some customers not being able to meet their obligations to the creditors, and may have missed one or two payments. The dust is now settling, but customers are still feeling the fall out. The credit policies of many lenders is too restrictive which dampens the aspirational dreams of customers and their hopes of getting a new home.
This is where Precise Mortgages comes in. We've improved our offering to assist those involved or wishing to get involved in new build mortgages. We're able to help those customers who may have experienced problems in the past.
Furthermore, we recognise that little statement I made above - by human nature we all aspire to better ourselves. Our new build customers have found their dream homes, visualised the day they picked up the keys and moved in, only to have their hopes dashed by the high street lenders. This is where we come along and try to pick up the pieces.
We understand that in this customer journey, being able to deal with an enquiry quickly and efficiently is essential - that's why we have a dedicated team to prioritise applications and remove any roadblocks to get the ‘yes’ needed as quickly as possible.
Of course, we have to remember that we are dealing with properties being built, and while we have to get the customer to ‘yes’ as quickly as possible, we also understand that the completion date may be way off in the future - that's why we are able to make offers available for up to nine months.
Did I mention the fact that we are also able to accept 5% builder deposits? It just keeps getting better. Can you see the specialist thread we are trusted for, coming through into the new build sector?
I'd encourage you to visit our website soon and take a look at our new products. I’ve given you a flavour of some of the new criteria enhancements we've made to our new build proposition, but there is so much more to see. What are you waiting for?
And one last thing, we will lend on flats up to 20 storeys – now, that's a bit special.
Precise Mortgages, the specialist lender, has announced its revamped new build residential and buy to let mortgage proposition. Earlier this year the appointment of Kevin Beale as National Sales Manager of New Build signalled the lenders intention to develop a compelling specialist new build lending proposition.
The new build market is dominated by high street banks and mainstream lenders and as such people who need a specialist lender are denied the opportunity of buying a new build property. In addition mortgage brokers often find that if a new build mortgage application is declined by a high street lender they have very few options and therefore find it difficult to help their client.
The changes made by Precise Mortgages to their lending policy means that the self-employed, people with adverse credit or people who simply do not pass a high street lender’s credit score now have a better chance of securing their dream property. There will also be benefits for landlords who are buying a new build property as many of the changes apply to buy to let as well as residential lending.
Key changes are:
• New Build Priority Processing Service introduced to speed up application to offer timescales.
• Up to 85% LTV with 5% builder deposits accepted.
• Offers valid for 6 months with an option to request an extension for a further 3 months.
• Lending on new build flats with commercial on the ground floor.
• Revised list of acceptable new build warranty types.
• Section 106 Planning Obligations considered.
• Maximum number of storeys increased from 15 to 20.
Alan Cleary, Managing Director of Precise Mortgages says: “It doesn’t make any sense that people who have some minor adverse credit cannot buy a new build property or that self employed people with only one years accounts find it extremely difficult to secure a new build mortgage. We are asking brokers who deal in the new build market that if you get a decline from a high street lender please give us a try.”
Further product information and a list of authorised Packagers is available at www.precisemortgages.co.uk
As a lender solely focussed on the mortgage intermediary market, we have established ourselves as the number one specialist lender of choice. Our aim is to provide solutions for customers that are underserved by high street lenders.
I can hear you asking the question - what makes Precise Mortgages the number one specialist lender of choice?
Simply put, we truly understand customer credit profiles and go the extra mile to design credit policy and products that meets the needs of those who are underserved by high street lenders - placing the customer at the heart of all that we do.
A vast majority of customers take their finances seriously and regard their commitment to financial transactions very seriously - particularly when THEIR HOME IS AT RISK IF THEY DO NOT KEEP UP REPAYMENTS ON THEIR MORTGAGE OR ANY OTHER LOAN SECURED AGAINST IT.
Now considering the events of the past, it's no surprise that many customers will have experienced some fallout from the financial crisis - we all know how the world of mortgages and loans were hit, and hit hard - let us never forget it either!
So, looking to the NOW... Customers have recovered, they've reset expectations and live more conservatively - perhaps a little more spend thrifty - and I have no doubt, more cautiously. What hasn't disappeared is the aspiration of individuals and families to want to improve their standing.
For the high street, the super prime market is so big that it can lead to many non-super prime customers feeling despondent. They feel that the mortgage market has failed them.
The specialism is to cater for as many high street declines as possible - the non-super prime market. Recognising the historic shock is one thing, and customers who, through no fault of their own, were pushed down a Debt Management Plan (DMP for those in the know), and got declined immediately. This was largely because unsecured creditors would not (at the time) discuss financial difficulties until the customer had gone in to default with them. Then and only then would the lender discuss the options available to the customer.
Naturally the default position and subsequent DMP scared the credit profile for up to 6 years. It's like a prison sentence for a crime you could argue they didn't commit. The economy stalled, jobs became uncertain, and many had to retrain or start out on their own.
They go hand in hand don't they? Employment shock and credit shock equals a change in customer credit profile. Coming back to my point, customers have not hidden the problem. They recognised their change in circumstances and many tried to proactively manage the situation.
So a lender that recognises customers who have been employed for less than the traditional 2 years (and you'll need a projection too), who may also have experienced a historic adverse credit event should not be shunned by society - that black mark on their book does not always paint the true picture.
With products that cater for the self-employed with as little as one year’s bonafide accounts, with adverse or even an historic DMP, we demonstrate how our range of mortgages consider individual circumstances.
It was a problem before, it's not now and it's no problem to Precise Mortgages. I've given you just one very simple scenario where we can help. Specialism isn't a one trick pony, we don't just do mortgages or second charge loans or regulated bridging. We do the lot. #NOPROBLEM