Alan Cleary - Managing Director of Precise Mortgages
The new Tenant Fees Bill which came into force on 1st June is certainly something your customers need to be aware of.
The bill has been introduced to protect tenants from the unexpected costs and hidden fees that can blindside them when they take out a new tenancy. Agents and landlords are now banned from charging fees for anything other than contract changes or termination when requested by a tenant; utilities, communications services and council tax; and issues for which the tenant is at fault, such as the replacement of lost keys. The new rules also involve capping deposits at five weeks’ rent for tenancies below £50,000 a year. Those found to be in breach of the new rules will face a fine of up to £5,000 for a first offence, with further breaches resulting in a fine of up to £30,000 and subject to a banning order.
Now don’t get me wrong. Anything which protects tenants from unscrupulous landlords is to be applauded. What does concern me, however, is the sheer weight of new legislation which has been introduced recently. The Tenant Fees Bill is just the latest in a long line of changes aimed at rebalancing the relationship between tenants and landlords and delivering a fairer, better quality and more affordable rental sector.
In the last 12 months or so, we’ve seen the launch of Minimum Energy Efficiency Standards which means that newly rented houses and those with renewed tenancies have to achieve an energy performance certificate rating of E or above. We’ve also seen the licensing rules for HMOs extended to any property rented to five or more people who form more than one household, regardless of the number of storeys, and minimum room size regulations being introduced.
Combine those with the government announcing it’s planning to get rid of Section 21 ‘no fault’ evictions and the ongoing phased reduction in mortgage interest tax relief, and you couldn’t blame landlords if they’re feeling a little overwhelmed. I read recently that there are around 120 pieces of legislation that landlords must adhere to. That’s a lot of information for anyone to keep on top of.
Brokers who have got their finger on the pulse can really make a difference to landlords who need help in navigating their way through the regulatory maze. This is where Precise Mortgages can help. It’s our view that brokers are fundamental not just to their customers’ success, but also to the success of the wider market. It’s why we place such importance and invest so many resources in making sure you have access to the support you need when placing complex or unusual cases.
We’ve expanded our sales team considerably in the last two years. It means wherever you’re based, one of our friendly and knowledgeable business development managers is never far away. In 2018 alone, our team supported 272 workshops, seminars and round-table events around the country to increase brokers’ understanding of specialist lending and, in particular, changes to the buy-to-let market. In addition, our office-based sales support team is on-hand to pick up your questions, ensuring you get the answer you need as quickly as possible.
So while new rules and regulations continue to keep coming thick and fast, it’s good for you to know that there’s support there if you’ve got a question about any of the changes or need a bit of help in placing a case.
Alan Cleary - Managing Director of Precise Mortgages
Imagine you’re approached by a customer who wants to purchase a buy-to-let but is struggling to find a lender who will give them the mortgage they want.
Despite having a monthly disposable income which could comfortably cover any void periods, the rental value of the property means they can’t achieve the loan size they need.
If you were presented with this situation, would you know where to go for a solution to your customer’s problem?
Fortunately, our top slicing option means that, providing a customer has sufficient disposable income (this can include earned disposable income, surplus portfolio rental income, or a combination of the two) and the rental income on the property they are looking to purchase meets a minimum 110% interest coverage ratio at pay rate, they can use the surplus income to demonstrate they can meet any rental shortfall.
Top slicing is available across our entire buy-to-let range including to limited company and personal ownership landlords, whether they are portfolio or non-portfolio (excluding first-time buyers, first-time landlords and repayment applications).
By taking a comprehensive view of customers’ circumstances, our top slicing proposition can provide landlords with greater flexibility around how they manage their portfolio. It can also provide improved access to two-year fixed rate mortgages when compared to underwriting which relies on the rental income of the property alone.
We’ve also made applying for top slicing easier by enhancing our DIP process. Brokers will no longer have to select top slicing as an option at the start of the process. Instead, the DIP will now automatically return the loan amounts available, both when using top slicing or just using rental income, for the products available to their customer. What’s more, if their customer is only using surplus rental income from their portfolio to demonstrate the required rental cover ratio, we won’t need to see any additional proof of income.
In addition, if brokers find after submitting an application using rental income only that their customers’ circumstances change, they will be able to switch on to top slicing post-submission without the need to rekey the application as long as top slicing was available initially.
Precise Mortgages, the UK’s leading specialist lender*, has appointed a new Business Development Manager to further strengthen its support for brokers in the London South West region.
The lender has appointed Charlotte Parker to support brokers in the Guildford, Kingston upon Thames, Portsmouth, Reading, Southampton, South West London, Sutton and Twickenham postcodes.
Charlotte has 18 years of experience working as a mortgage advisor for Nationwide and, most recently, as a mortgage broker for Embrace Financial Services.
Her arrival is part of a reshuffle of Precise Mortgages’ Sales Team which will see her predecessor, Dan Watson, move into a new Bridging Specialist Distribution Manager role, enabling the lender to provide nationwide support for its Bridging proposition.
Jamie Pritchard, Head of Sales for Precise Mortgages, said: “I am delighted that Charlotte has chosen to join our Sales Team. I believe her vast experience will stand her in good stead for understanding the needs of her broker relationships, as well as educating them about the solutions that a specialist lender like Precise Mortgages can provide.”
Source: * BVA BDRC Project Mercury Report Q4 2018
Precise Mortgages, the UK’s leading specialist lender*, has made its top slicing feature available across its entire buy to let range to help more customers achieve greater flexibility around product choice and loan size.
The lender is now accepting top slicing on all eligible personal ownership, limited company, portfolio, HMO, and holiday and student let applications. First time buyers are excluded.
Customers will be able to use surplus portfolio or earned income to demonstrate that they could meet any financial stresses on their new property application, rather than through the rental income of that property alone.
This can help to unlock its range of 2 year Fixed rate buy to let mortgages, in addition to its 5 year Fixed rate products, to give customers access to a wider range of products which may previously not have been achievable.
Precise Mortgages has also streamlined the application process by reducing the number of questions brokers have to provide answers for and enhanced its online buy to let calculator.
Alan Cleary, Managing Director of Precise Mortgages, said: “In a challenging market, we’re always thinking of new ways to help more customers get the buy to let mortgage they want and optimise their investment opportunity.
“By making our top slicing feature available across our entire buy to let range it creates greater access to our 2 year Fixed rate products, therefore opening up options to more customers, particularly those who might have been restricted by ICR requirements in the past.”
*Source: BVA BDRC Project Mercury Report Q4 2018
Alan Cleary - Managing Director of Precise Mortgages
It seems like there’s hardly a month that goes by now when we’re not told about a fancy new term to describe a certain demographic of people. In recent times, we’ve been introduced to the ‘squeezed middle’, the ‘millennials’, the ‘JAMS’ (Just About Managing) and ‘Generation Z’.
The latest group I’ve read about are the ‘slashies’ – self-employed people who are working two or more jobs, for example as a web designer/taxi driver, to make their living. According to a study by the Association of Independent Professionals and the Self-Employed, there are now more than 320,000 ‘slashies’ (I’ve also seen them described as having ‘portfolio careers’ or ‘multi-hyphenate careers’) in the UK.
Although it’s easy to be dismissive when you read about these new terms, I think this new emerging demographic of workers highlights a really important point – the make-up of the UK’s workforce is changing and the way they’re working is changing.
The latest government figures show there are now 4.83 million self-employed people in the UK, working in a huge variety of different fields – from professional landlords to tradespeople, taxi drivers to freelancers.
Technological advances have encouraged many people to take the plunge – all you need is a smartphone or laptop and a good Wi-Fi connection and you can work from almost anywhere. People now have access to all sorts of new opportunities that simply didn’t exist 10 years ago, giving them the freedom and flexibility to be their own boss and make a decent living.
But while the UK’s self-employed sector continues to go from strength to strength, many lenders still seem to be lagging behind when it comes to approving new applications, meaning these workers can still struggle to secure the mortgage they need.
The Mortgage Market Review (MMR) in 2014 saw the introduction of new rules to ensure borrowers are only accepted for mortgages they can afford. All prospective borrowers must now prove their income, so the difficulty people who work for themselves have is providing that evidence as their income can fluctuate from month to month.
Many lenders require more proof of employment from self-employed people than they do from employees, the most common difference being a two- to three-year history compared to just 12 months for salaried employees. As many lenders perceive their financial situation as being too complex or their income as too irregular, it means there are a growing number of potential borrowers unable to access the mortgage they need, as well as an increase in brokers struggling to place their customers’ cases.
Fortunately, specialist lenders, such as Precise Mortgages, understand the challenges and complexities of these cases and can provide solutions to customers who fall outside of mainstream lenders’ criteria. Since MMR came into force, specialist lenders have been in the vanguard of ensuring self-employed workers can still access mortgages. Specialist lenders have experience of reading financial accounts and SA302 statements, and have the risk management processes and skilled underwriters in place to ensure a good outcome for the borrower, broker and lender.
So if you’re approached by one of the UK’s 4.83 million self-employed customers and they’re struggling to get the mortgage or loan they want with a mainstream lender, it’s worth knowing that there are other lenders out there who can help. With the self-employed market worth an estimated £275 billion to the UK economy each year, it’s vital that their growing numbers are catered for, both now and in the future.