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News Review: Buy-to-let


Why buy-to-let is back in the spotlight by


Bob Young, managing director, CHL


Mortgages


The past month has seen a variety of issues raised around the buy-to-let mar- ket which go some way to proving that it is not just a strengthening sector but also one that is increasingly in the regulatory spotlight. Evidence of this was given


by the FSA’s recently pub- lished Retail Conduct Risk Outlook which highlighted its concern about the fraud- ulent use of unregulated buy-to-let mortgages by resi-


dential borrowers seeking to circumvent the tightened criteria that exists in the resi- dential marketplace. We can’t be surprised that this is happening given the diminished role of interest- only mortgages and the sim- ple fact that the major lend- ers have cut back on their lending and are only looking for low-risk borrowers with significant levels of deposit. In such a marketplace, where interest-only options are so few in number, there will always be those who try it on and there will always be a certain number of advisers willing to place this business. We have no real clue as to how much of this business is


News Review: Short Term Finance Kissing frogs will help you place bridging


by Paul Brett, business


development director, borro


What has become clear in the past few months is the growing value of the short- term lending industry having proactive representation in the form of its trade bodies. The Association of Short


Term Lenders has, since its inception, provided a focus point for new and estab- lished lenders and has done much to raise the profile and professionalism of the indus- try in general.


The industry has now


reached a point where its growing sophistication and


the number of new lenders attracted by its evident suc- cess, requires that its premier trade body is not only seen to represent the industry as a whole but also can engage and be seen to engage with Government and regulators with a mandate based on a mutually agreed framework of standards which speaks directly to the intermediary and the consumer. Much has been said about bridging lenders who are seen to be enthusiastic at the outset of an enquiry and yet have little or no inten- tion of following through and completing a deal. After the complaints over enticing ‘sweetheart’ rates from some lenders, which became un- available as soon as the case


18 MORTGAGE INTRODUCER APRIL 2012


was at a late stage, cherry picking cases is one of those issues that brokers will have to negotiate as best they can, because there is nothing wrong with any lender say- ing they will take a look at an enquiry.


What is wrong is when the case is sat on and then rejected, usually at a time of maximum embarrassment to the broker and maximum inconvenience to the client. In an industry which is built around speed, this makes the situation galling.


that much more My view is that brokers


can save themselves a lot of time by making use of the growing number of special- ist firms who place bridging cases for brokers.


If I were a broker, unless


I had the luxury of an infi- nite amount of time, I would rather engage with a firm that could source the right lender for me and save me the time and hassle. Unless you deal with bridging enquiries all the time, then it is unlikely that you will know which lenders are serious about their lend- ing and which are just looking for the juiciest deals. Equally many of the spe- cialists are able to suggest other avenues which might include alternative methods of financing s You might have to kiss a


few frogs to find the right partner but there are good companies out there who can save you and your client a lot of unnecessary work.


www.mortgageintroducer.com


making it through and one has to wonder if some lend- ers are actively working to stop this happening or turn- ing a blind eye, just happy to have the mortgage paid each month.


In other news, the grow- ing popularity of buy-to-let is clearly having an impact on product pricing, criteria and availability. Lending in this market is very much a moveable feast and no lender wants to be ‘last man stand- ing’ if their competitors pull market-leading rates. The increasing demand means that the market moves - and moves quickly. This level of demand is clearly positive for the sector however lend-


ers have to manage their processes and pricing cor- rectly. Finally, according to LSL Property Services,


private


sector rents fell by 0.6% in February. This can be at- tributed to the end of the stamp duty holiday which meant an increase in house purchasers at the lower lev- el. To my mind, rent levels remain strong and this is a short-term fall which will be reversed quickly.


For


those who can purchase an investment property in the right area with strong ten- ant demand then rental yields should certainly sat- isfy for a considerable time to come.


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