A concerning new report from Natwest has uncovered some worrying opinions of mortgage brokers relating to the future of the buy-to-let market.
In a survey of 441 intermediaries, 66% said they had seen an increase in demand for buy-to-let mortgages, from consumers over the last 6 months. Only 7% said that they had seen a decline.
Looking into their crystal balls to the initial months of 2016, 32% said that they believed a further increase in business was likely. However, 41% predicted a decrease in activity, with 27% expecting the market to remain stable.
Further data from the survey shows that the types of customers that brokers deal with varies across the market. 19% of brokers questioned said they did their business with professional landlords, with 55% saying that did none or only a small amount with the professional sector.
As for best prospects, 37% feel that remortgaging offered the best, follow by 23% who replied amateur landlords with 2 or less properties. These types of landlord with more than two properties were seen as next most attractive (18%), while 11% of respondents said that professional landlords offered the best prospects.
The main issue causing concern for landlords was upcoming increases in regulation (59%). Next most concerning were rental voids (35%), rental arrears (34%), costs of maintaining a property (20%) and general tenant administration (13%.)
When talking about the most important aspects of a lender’s buy-to-let proposition, brokers highlighted clear lending criteria, straightforward rental cover and flexible underwriting.
Graham Felstead, Head of Natwest Intermediary Solutions, said, ‘the results of our survey suggest that the buy-to-let market will continue to be an attractive one for mortgage brokers. However, it does appear that some of the uncertainty surrounding the interpretation of the new Mortgage Credit Directive, the new tax regime for landlords and the Government’s focus on boosting home ownership has muted the optimism for further growth amongst a sizeable number of brokers.’
Mr Felstead believes we could see brokers employ a, ‘wait and see’ approach until the new factors take shape. He went onto say that, ‘brokers are looking to lenders for clear, consistent and uncomplicated criteria, affordability calculations and underwriting, good BDM support and the availability of interest only. Whilst not surprisingly , the challenge for lenders is to meet these expectations. We have made great in-roads into the buy-to-let sector having simplified our rental cover calculation, improved criteria and armed our BDMs with more support. We are keen to grow further our presence in this sector as we journey through 2016.’