to domestic mortgage. So it was easier access to finance which was the real issue because there was so much property being held in business expansion schemes which were coming to an end. There were about 600,000 properties in the private rented sector which were going to come out of the private rented sector and part of our motivation was to keep our agents in the business. So that was what it was. Where it is today? It’s all part of a very muddled picture almost. The government see it as an alternative to social housing and there are a number of local authorities which have no stock and are very dependent on the private rented sector. Some local authorities have as many as 200,000 properties from private landlords to bolster the fact that there’s no social housing. What we don’t know is what dynamic the government might succeed in getting in terms of funding around social housing. That could change it all for a private landlord. As for institutional investment, it’s not buy-to-let as we all know it, it’s a form of social housing and that’s where the big risk is for the institutional investor. I think that buy-to-let in the private rented sector is in a pretty difficult place in the moment actually.
What Would help it? IP: Housing stock is what the country needs. It is the simple answer but where does the finance come from and who builds it?
hoW should brokers Wanting to breaking in this sector go about it? RS: If they’re not in already then they’re going to struggle. I genuinely think that this is a specialist market which has a lot pitfalls and issues. There are a restricted number of lenders which do have quite
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varied criteria and you do have to be able to pick your way through that minefield well in order not to get yourself in the wrong place. If it was a specialist market where existing players weren’t doing it very well, then I could see the argument for other people coming in. But I think that the people who do the job already actually do a good job, therefore if you want to come and play in this market, you have to do your homework. AY: I think the majority of brokers in this market are authorised brokers anyway rather than existing non-regulated brokers who have grown up as commercial brokers. Any broker coming in would probably have to tie up with organisations that have landlords themselves but don’t have mortgages currently because on the other side of it, it would be very difficult. There are thousands of lettings agents around the UK who don’t do mortgages but they would collectively have tens of thousands of landlord customers, so I think there’s potential there. Bearing in mind the size of the market we’ve said is going to be £12bn this year. It’s not a huge market to go for and you do need access in some way to those landlord customers who will have needs for mortgages. AM: I think the estate agents are key.
Brokers need to be professional about what they’re doing. Too many brokers don’t talk to their clients about why they want a buy-to-let mortgage. Is it for capital growth, for yield or for topping up a pension? Then you get into the view of, is buy-to-let a good investment versus other investments you might have? And then looking at landlords who have over three properties, 10 plus properties, then you’re skirting onto the commercial world. You need an understanding of commercial too and as these clients grow they start developing their own sides etc etc, so it’s a massive area. There’s a lot of opportunity but you need to start doing it well rather than just playing at it, as with anything really. LK: It’s not a market for new brokers really. Clients are particularly savvy and new brokers could get exploited by people using buy-to-let as self-cert mortgages. Brokers need to be aware of clients doing that at the moment. If they want to break into it then go down the regulated market first, get an understanding of that and then broke over into looking at the buy-to-lets because they need to know the ins and outs of everything before going into the unregulated business. IIt can be dangerous in this climate. n
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