becomes to fund them. The one area of the whole marketplace that does require some development and innovation is the professional landlord end. NS: We talk about all these new lenders coming in but let’s be under no illusion that we’ve got two dominant lenders in BM Solutions and TMW. If either of those for any reason at all step back from this market, it would be catastrophic. We say it’s a very competitive market place but it isn’t really. If BM says they’re going to ship their £4bn into first-time buyers which Lloyds is perfectly entitled to do, then the marketplace is a bit snookered. So we actually need other lenders such as the likes of RBS and Santander to come and play properly and provide proper competition and actually see where margins do settle down and reflect the risk more accurately. So we talk about it being super, which it is, but only so long as BM and TMW remain committed. We’ve been going around to our panels and we say we need another one of the big boys to come in because I’m terrified should BM or TMW say they’re going to hold for the next year.
so hoW can the market groW if it is so dependent on these tWo lenders? NS: It can’t quite frankly. You’d need Santander or RBS to join in. IP: We’d welcome the competition as well from one of the big boys, competition is good for the market. NS: It isn’t healthy when a lender holds 50% of the market and TMW must be there nearly now this year. GW: Well we are and you’ve got the added dynamic of the fact that with BM Solutions coming back in terms of portfolio lending, you’ll find that TMW are a lender of one. That again creates an unhealthy scenario for TMW because
you’re taking 100% risk in that market. To me it’s about product innovation but with lenders understanding the risks and pricing for the risks and ensuring they are delivering for the demand the market currently has. The market is crying out for different types of lending in buy-to-let and it’s that range of amateur landlords, experienced landlords with a small portfolio and the actual portfolio landlords. Ian Carswell: What are the drivers from the older investors?
get rid of but they can’t buy anywhere else simply because their hands are tied. I’d like to see that scope widen a little bit more because there are people who want to buy and especially off the repossessions that we’re expecting next year. ML: To the various points about product innovation coming along, I don’t see that coming through in terms of the organisations and propositions we’ve seen. It will be at the margins. NS: We do need the likes of Santander and RBS to come and play in the one to three portfolio size to take the strain and stress off of TMW and BM.
AM: They think it’s a good time to buy, in historical terms rates are still low, these are 10 plus and 20 plus portfolio sizes. Lea Karasavvas: We’ve seen a similar thing but not at the same extent. People with 5 to 10 properties are trying to get back into the market but can’t because of the restraints you talked about before. But you aren’t going to dispose of an asset in this climate so you can get to that three level threshold so you can buy somewhere else so they’re all sitting there holding onto these properties they don’t really want to
is that likely? ML: A couple of the names have been mentioned by the FSA as very likely. AM: Agreed, very likely but they’re going to start like everyone else. They’re going to come in at the low loan to values and not actually make that much of a difference. They’re going to be cautious so they’ll take a while. LK: Abbey tried that when they delved into the buy-to-let market a while back. They piloted a few products and never really went aggressive with it which was a shame so it’d be nice to see them come in and really have a go. NS: If I were Santander or RBS I would want to get the service right, the scorecard right and understand the portfolio size. I’d do one to three properties at most, 75% LTV and 125% rental cover and then compete on price until I get my service proposition right. That would take the edge off BM and TMW which is what we want.
regulation from europe appears to be a looming spectre, Where are We up to? RS: When the first draft of the European
Join the debate @mortgagechat mortgage introducer OCTOBER 2011 41
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