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Complex buy-to-let : challenges and opportunities in 2023

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 22. December 2022

Looking to speak to mortgage brokers who do complex buy-to-let cases about how the past year has been and what their expectations are for next year. 

  • How has demand been over the past year? What has lender product choice and application process been like? 
  • Do you expect that to change or stay the same next year? Where do you see the biggest opportunities and challenges in the space? 
  • Do you think more brokers and lenders will target this space? 
  • What do you want to see from lenders? 

7 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
We have seen an unprecedented increase in applications for Limited Company Buy-to-Let mortgages, and from portfolio landlords looking to raise further money for future purchases. Many of our landlords have also been turning to auctions to source better value property, and are more open to Bridging finance options unlike before.

Going forward into 2023, the professional landlord will continue to look for those bargains and opportunities, as property price changes start to filter through. For those smaller landlords, many will look to exit this market as costs increase and monthly profit dwindles. The challenges are always going to be on Stress Tests, allowing landlords to maximise their borrowing opportunity, and with rents increasing that will likely happen organically. Does the current portfolio pass the same stress test too?
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Riz Malik
Independent Financial Adviser at R3 Wealth
The complex buy-to-let market should improve next year as lenders innovate and are forced to compete. Lessons have been learned from the fourth quarter of 2022, and many mortgage prisoners will need to be rescued. Trying to place cases remains difficult, particularly for portfolio landlords who will be reassessing their holdings. Next year will truly be a case of survival of the fittest.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
The majority of buy to let lenders should re consider their stress testing following the rates reducing slightly since the impact from the budget a few months ago. I do believe there will be new BTL products and lending criteria launched by the end of Q1 2023. It would be interesting to see if that’s in the favour of landlords like we hope as the cost of buy to let mortgages is only going to hit the tenant. With the cost of living crisis likely to be setting in, in the new year that’s only going to put more pressure on the tenants. Making it even harder to save for a deposit for those looking to get onto the property ladder.
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Mike Staton
Director at Staton Mortgages
Its a fact that the simplest BTL in 2020 has now become a complex BTL, there is going to be huge demand from landlords, fighting to get the best deal out there as lenders tighten the screws on affordability. Portfolio Landlords are being hammered and you can see why many of them are looking at an exit strategy. Looking at mortgage rates and affordability tests for BTL landlords at the moment is as cringeworthy as inviting the Salty steak man to a World cup ceremony. Lenders have been given the ability to scrap stress testing so let's look at ways to make it affordable to keep the landlord market alive, to say the BTL market is not regulated, lenders have created a hell of a lot of red tape and hoops for landlords to jump through, it feels like these lenders are committing mortgage suicide by turning these clients away
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Matthew Jackson
Director at Mint FS
Demand has been really high for this type of investment in 2022, and despite challenges from downvaluations in Q3 and Q4 specifically for Multi Units and Student Lets / Small HMO's i expect this to remain high in the coming year.

Products have of course increased in pricing and lenders are underwriting with a more specific focus on the landlords experience and looking much closer at their portfolio but this is to be expected.

Broadly speaking any investments that avoid the challenges of ramped stress testing will become more attractive to savvy investors and i expect to see more demand for Holiday Let / Air BNB and Small HMO Properties for student / professional letting and i would like to see more choice of lenders in this space.
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Amit Patel
Adviser at Trinity Finance
Landlords will diversify their portfolios and expand into MUFB, holiday lets, and semi-commercial as the rental yield will be more attractive. I expect the biggest growth to be in bridging finance in 2023 as savvy property investors look to complete transactions as quickly as possible. In addition buy-to-Let refurbishment mortgages designed to help landlords to improve the condition and EPC rating of a property will become popular.

Product innovation will be key as far as lenders are concerned and I wouldn't be surprised to see more lenders enter this specialist space.
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Austyn Johnson
Founder at Mortgages For Actors
Complex BTL is where I cut my teeth. Our head office, HD Consultants is a complex and portfolio BTL specialist. We have clients with 1,2,3 & 300+ properties, all of which, we keep serviced to ensure maximum profit for them. This space will always be popular due to the multiple property remuneration, but aside from that, it is a difficult one to get into due to these types of landlords needing a quality broker. When they find one, they are loyal. Lenders such as Landbay, Paragon and Quantum are already great lenders for this type of thing. If lenders followed their lead, the complex BTL space would be easier to navigate. That aside, it also requires a good broker to be able to explain the client's situation and circumstances to the lenders, it's no good hoping they will do it themselves. Especially with multiple streams of income