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Complex buy-to-let - seeking views from brokers

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 12. April 2023

Looking to speak to mortgage brokers about complex buy-to-let market. 

  • What is demand like for this kind of business and has it changed over the past few months? 
  • What are product choice/lender criteria like? Is there anything you would like to see more/less of? 
  • What advice would you give to a complex buy-to-let borrower? 

 

 

6 responses from the Newspage community

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Harjinder Atwal
Founder at Bibi Mortgages
The demand for complex buy-to-let has decreased over the past few months, mainly due to higher interest rates and increased stress testing by lenders. These landlords are now either having to reduce their borrowing requirements or increase tenant rents to get close to their borrowing target. There is still plenty of product choice, however, with specialist lenders proving very creative in their approach to the current situation. However, it would be good to see more high street lenders adapting the more flexible approach of specialist lenders and stress testing each case on its merit. My advice to all landlords is very simple: speak with a good broker who can understand your business needs and find a suitable solution.
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Justin Moy
Managing Director at EHF Mortgages
For us this is probably the largest growth area in 2023. Where new and existing landlords are looking for some level of value, such as properties that need development before they can be let, multi-occupancy (HMO) for better monthly yields, and the use of Limited Company structures make this a market full of opportunity. Products have improved significantly, and Bridging Finance has maintained its relatively cheap costs when compared to standard BTL deals. We have seen more innovation from lenders, such as Refurbishment BTL products from CHL Mortgages and Precise Mortgages, as well as the Combined Bridge to Let offering from Precise, giving a clear strategy and exit route for those borrowers looking in this market. With a reduced number of properties available for sale, and prices dropping, there are some great potential opportunities for professional landlords in particular.
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Chris Sykes
Technical Director and Senior Mortgage Adviser at Private Finance
It's an interesting one. Generally, our enquiries on the buy-to-let front, whether from current clients or new clients, is a lot lower than it has been specifically down to interest rates and deals not working anymore. However, specialist buy-to-let is busier than usual. Where standard buy-to-lets often are no longer making sense for borrowers, they are looking into more specialist solutions, whether this be a holiday let, a semi-commercial property, a multi-unit block of flats on one title, an HMO or a mix of them all. There are plenty of lenders still in this space and rates have been improving month on month since the bedlam of last year, which helps with the stress rates being applied to these mortgages and makes the numbers stack up.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The complex buy-to-let market, like any sector that deals with complicated transactions, is served by a number of specialist lenders that have made this their niche. However, this type of deal needs the hands-on expertise of a highly experienced underwriter and so can't benefit from the cost savings other lenders get from automating large parts of the underwriting process with credit scores and the like. The upshot of this is that whilst these complex deals can be done, the interest rates and fees are higher than for a normal buy-to-let, so the applicants need to be confident that the rental income they will ultimately achieve is going to be worth the additional time, energy and cost of this type of deal.
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James Vince
Managing Director at Castle View Finance
Castle View Finance Ltd is a specialist broker in the complex Buy-to-let space, we pride ourselves in finding solutions to complex situations in the investor space. Although we have seen a slight drop in new cases in Q4 2022 for standard Buy-to-lets, we have certainly seen an increase in Holiday lets and Short-term let inquiries.

This switch in inquiries is largely down to the cash flow and return on investment available to our clients with the rise in Airbnb and Bookings.com style accommodation. the lure of triple the returns of traditional BTLs along with no issue of tenancy agreements makes this an attractive solution for a remortgage or a new acquisition.

The competitive BTL mortgage market has been improving throughout Q1 2023 with new lenders and many new products available in the market. However, Stress testing has reminded high as expected and creating many BTL landlords to review rents to accommodate these new stress tests levels.
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Gary Bush
Financial Adviser at MortgageShop.com
Buy to Let has indeed been complex since the George Osborne enforced changes to this part of the market. The tax changes are the main thing that has reduced the size of the Buy to Let lending market firstly with the 3% Stamp Duty surcharge, then mortgage interest subsidy, and then the Bank of England minimum underwriting standards. Covid and the cost of living crisis lender effects were minor blips to mortgage underwriting compared to these. It's pleasing to say that the choice of lenders and range of products for Buy to Let is excellent - all we really need to see off the rented property shortage is an end to the mortgage interest conditions. With the Energy Performance Certificate conditions still looming in the background, 2018, unless the government takes the initiative to remove the mortgage interest condition it's hard to see what landlord is likely to invest further into their properties to bring them up to the required EPC, E level, or higher rather than sell them.