generate more income while writing fewer mortgages.
“The lively buy-to-let market has allowed us as a company to revisit our estate agency introducers and start talking again to the departments that we have often just smiled at from afar, one of which is the lettings department,” Karasavvas adds.
A PAIR OF STAR-CROSSED LOVERS Mortgage brokers and tenants are one of the most unlikely of pairings for the simple reason that a tenant does not need a mortgage. However it may be that the moniker “mortgage broker” is a misnomer. A broker has an arsenal of products which can be used to cross-sell to a mortgage borrower. These range from the obvious such as protection to the obscure such as will-writing. As valid as these products are for borrowers the same can be said for tenants. Underneath every landlord is a host of tenants who are likely to have never spoken to an adviser. These people have the same needs of contents insurance and life insurance, the only difference is they aren’t pursuing a mortgage while they’re pursuing accommodation. A tenant’s landlord however does have access to an adviser and it’s just a question of bridging that gap. “There’s certainly a whole range of
products a broker can get to a tenant,” says Ying Tan, managing director of The Buy-to-Let Business. “The basic contents for instance, so carpets and the belongings of the person won’t be insured by the landlord and that’s potentially a sale.
“The biggest challenge however is the
broker speaking to the tenant as they’ll never have contact with the tenant.” Tan says that the market in tenants is
relatively untapped however he believes it is untapped for a reason. “There isn’t enough compensation for that type of business. It will be quite a lot of work so is it a lucrative stream a broker should chase? Protection is an opportunity and landlords insurance is an opportunity but larger brokerages
www.mortgageintroducer.com
“Beneath each landlord are tenants who would otherwise be potential homeowners especially so in the case of reluctant renters”
should really focus their energy on closing more mortgage deals.” Greater compensation from
protection providers would trigger a gold rush for tenants however it’s certainly not something that brokers can bank on. Passion for becoming a homeowner however is says Geoff Hall, managing director of Berkeley Alexander.
“The UK is still very much a nation of homeowners,” says Hall. “It’s very easy to get referral business from tenants and landlords; the key is of course accessing the client. From the start you can offer a tenant accident, sickness and unemployment cover, life cover, contents etc.
“It should certainly be in the landlord’s
interest as it protects their rental income and it makes a tenant much more attractive if they’ve got protection cover.”
But honing in on the passion of a
reluctant renter Hall says: “Eventually they will want to purchase a home and once they’ve got a deposit together, they know they have a mortgage broker ready to call upon to get the first deal. From that first contact you have then got another stream of business from the entire life cycle of that customer. “Accessing tenants as potential clients as well as landlords is not an easy task but there will clearly still be a need for advice on other products,” says Hollingworth. “Protection and insurance is an obvious area where tenants will still need the help of a broker. The question is how to reach those people.”
MASTERS OF THEIR FATES The best business minds have a
propensity to adapt to a changing environment. Brokers have that same opportunity as the UK property market is slowly being transformed. “Now is the perfect time for brokers to focus on the products in their portfolios which cater specifically for the needs of landlords and their tenants,” says Tim Johnson, chief executive at Paymentshield.
And he adds: “Ultimately, everyone wants to protect their investment, and quality GI products are valuable and worthwhile to clients. Developing strong and long-term relationships with both new and old customers and keeping up with their situation, leads to further sales and longevity in the professional relationship.”
Karasavvas sees the opportunity in the shifting landscape as well. “We can now offer some competitive deals to their landlords again, as well as look at exploring other alternatives with them such as rental insurance allowing them to protect against rental voids from their tenants,” says Karasavvas. “By cross selling to the tenants as well we can open the avenues to many more sales. Perhaps the growth of the buy-to-let mortgage market will have a bigger impact on the brokers than they realise.” Taking a wider look Boulger doesn’t
break a sweat when looking at what rental culture means for brokers. “An increasing rental market will impact very positively on brokers,” says Boulger. “For the simple reason that 90% of buy-to-let business is through brokers, whereas only a little over half of residential mortgages business is originated by brokers although they have a larger share of the first-time buyer market.”
And still with his eyes on the prize Boulger adds: “Furthermore, the proc fee on buy-to-let mortgages is generally a little higher than on residential.” Wherever the balance of accommodation shifts, brokers should be aware that they can play both sides of the fence. A diverse toolkit and savvy business smarts will ensure an intermediary will see through tomorrow, and tomorrow, and tomorrow.
MORTGAGE INTRODUCER JAN APRIL MORTGAGE INTRODUCER UARY 2012 33
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