News Review: Buy-to-let
Legal & General sets sights on buy-to-let By Sarah Davidson
Legal & general mortgage club has set its sights on becoming the top distributor of buy-to-let mortgages in the uK by 2014. Ben thompson, managing
director of L&g’s mortgage club, said the decision came after a review of the medium and long term prospects for the mortgage market. He said: “as a large
mortgage distributor we have to be aware of what will happen in the medium and long term and decide what markets are likely to grow over these periods. “much of our thinking is
around the future growth of the buy-to-let sector and we have decided we want to be a leading distributor of buy-to- let within three years rather than a leading distributor which also does buy-to-let.” thompson said L&g had
been involved in talks with buy-to-let specialist lender Paragon, which had helped shape this thinking. Paragon has long said the
balance of homeownership in the uK is shifting towards more people renting privately for a combination of reasons including rising immigration, the growth of the uK’s student population as well as social factors meaning younger people preferred the flexibility of renting. John Heron, managing director of Paragon
mortgages, said: “the last couple of weeks have brought this more sharply into focus with government statistics showing 17.4% of english is housing now privately rented. “this is a remarkable
change around in housing terms. in the late 1980s the private rented sector represented just 8% of housing making it a very poor relation of homeownership. “given that housing is a
long term market this speed of change is remarkable.” thompson said L&g’s
working relationship with Paragon dated back to 1997 when he admitted many advisers felt financial planning for tenants and landlords wasn’t seen as a particularly attractive prospect. But this was changing he
said. “Fast forward to now and
the profile of your average tenant is very different,” he said. “they are older and more likely to have children, be looking at investments and therefore need protection. “this is a completely
different calibre of person who is much more likely to buy into financial planning. the social change is happening and advisers need to keep pace with this.” thompson added that part
of L&g’s wish to drive buy- to-let business was from the origination perspective.
He said: “Quality lending
being done in the buy-to-let sector. it’s come through a significant down turn and the business being introduced today is double protected by a rental guarantee and the individual profile and earnings capability.” Heron reiterated this
saying: “in the run up to the credit crisis there was a lot of chatter about the quality of buy-to-let – i even remember the Financial Services authority using the phrase ‘toxic product’. “But buy-to-let has now
been seen to perform and its resilience is well established. that’s clearly one of the things attracting new lenders to this sector.”
Product exclusives thompson said as part of this drive to build L&g’s buy-to- let specialism, the mortgage club would be looking to secure exclusives for its members. He said: “L&g is looking
at producing more exclusive product and we are constantly monitoring lenders that are considering extending into the buy-to-let market. “We do a lot of work in
the background with lenders to help them market and design products and we are in ongoing talks with mutuals thinking about extending later this year.” thompson would not
Aldermore. Making your BTL clients feel more at home.
10 mortgage introducer AUGUST 2011
confirm which mutuals were looking at launching buy- to-let propositions but said: “We’re definitely doing lots together with Paragon on the product side.” Heron added that although
Paragon was “not quite in exclusive territory yet” he did expect this to be a possible route in the future. He said: “i would expect
our collaboration with L&g to lead down that route in due course.”
Workshops L&g also confirmed plans to hold adviser workshops designed to help existing buy-to-let advisers expand their client bases as well as offer training to residential advisers looking at doing more buy-to-let mortgages in the future. Heron said Paragon and
L&g held a joint seminar on buy-to-let in London in June and planned more in the same mode. He said: “the objective is
to educate advisers, give them context of whole market. What are tectonic plates doing in the housing market? “We found there was a
desire to understand more about the difference in profile between professional landlords and smaller investors.” thompson said details of
regional seminars would be announced later this year.
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