The thriving specialist mortgage sector has witnessed significant expansion in recent years, navigating the intricate landscape shaped by regulatory and governmental interventions. As the CEO of Connect for Intermediaries, Liz Syms oversees a multifaceted operation involving brokerage, packaging, and networking. Through this comprehensive business model, she has observed the transformative effects of regulatory shifts on the market, providing a holistic perspective from various broker vantage points.
Amidst these developments, a discernible pattern emerges — a surge in intricacies necessitating a heightened level of specialisation. The evolving dynamics underscore brokers’ need to embrace profound expertise to successfully navigate the ever-changing mortgage landscape. As the industry undergoes continual transformations, the role of the specialist becomes increasingly pivotal in meeting the demands of a complex market. Buy-to-let interview:
“When I started out, I was a full IFA – doing pensions and investments and mortgages,” she says.“But as more of my business became mortgages, I didn’t think it was possible to be a specialist in all those areas – pensions, mortgages and investments. “I’m seeing that happening again, but now to the mortgage sector itself, and I don’t think most people can be really good in every single mortgage sector,” she adds.
Buy-to-Let Interview| Embracing the dawn of commercial BTL transformations
In the buy-to-let (BTL) realm, this interview discloses that the dawn of substantial changes has unfolded, notably impacting the intricate market landscape. According to Syms, brokers navigate an increased workload as heightened expectations dictate a more comprehensive approach to handling client cases.
While the limelight has focused on the extensively discussed portfolio lending alterations initiated by the Prudential Regulation Authority (PRA) and government-driven tax reforms, the evolving intricacies extend beyond these well-known changes. Notably, the landscape now demands a deeper understanding of multifaceted elements such as houses of multiple occupation (HMO), expatriate considerations, and offshore investments.
As we awaken to the commercial BTL landscape, it becomes apparent that brokers are grappling with prominent regulatory shifts and contending with the rising complexities embedded within HMOs, expatriate investments, and offshore dealings.
This dynamic environment necessitates a more nuanced and detailed approach, requiring brokers to delve deeper into these diverse realms to ensure the successful progression of client cases. The commercial BTL arena, marked by the echoes of regulatory updates and market shifts, beckons brokers to adapt and navigate the intricate pathways that lead to successful client outcomes.
“Property investors are also waking up to the commercial market because there are attractions to that space because it sits outside some of the portfolio changes – particularly semi-commercial,” she continues. “So more investors are waking up to that, brokers are wondering how to cope, and our commercial arm has gotten busier over the last year. Projects involving shops above flats, permitted development, and refurbishment have been the main sources of cases in this regard.
Buy-to-Let Interview | Criteria interpretations
There has been some concern about how lenders handle the changes in the complex buy-to-let market. Syms says she has seen some interesting criteria interpretations as lenders settle down.
“Some lenders are being more flexible,” she says. “Lenders are trying things out,” says Syms, and those whose lending has slowed a little are asking if they have gotten it quite right to this point.
Buy-to-Let Interview | Considerable Increase in Workload
Recent changes in the UK mortgage market have significantly increased brokers’ workloads. According to Syms, brokers must prepare for this surge, particularly when managing high-profile clients.
Developing detailed business plans has become essential for brokers with long-standing client relationships. Syms advises brokers to confidently present these plans to clients and encourages their feedback. This approach ensures brokers manage the growing demands effectively while maintaining strong client relationships.
Much of the additional workload has shifted onto brokers, highlighting the need for lenders to simplify processes. Syms stresses that lenders who streamline operations will gain a competitive advantage in the market. Simplified systems not only support brokers but also enhance overall efficiency.
Addressing Inflexibility in Portfolio Assessments
One pressing issue involves rigid portfolio assessments and calculations. Many landlords who secured deals before PRA regulations face challenges despite having rental income exceeding mortgage payments. Syms calls for more flexibility from lenders to accommodate these borrowers.
Lenders that adopt broader financial considerations in background checks have seen success. Adjusting calculations to reflect higher rental income than mortgage obligations benefits brokers and clients. Such adaptability positions lenders as forward-thinking and client-focused.
Navigating Complex Processes
Despite efforts to simplify, some lenders struggle to communicate new processes. Syms expresses concerns about the readiness of staff to manage complex underwriting requirements. She notes that underwriting departments often ask unusual questions, suggesting uneven preparedness across the industry.
Lenders must prioritise continuous improvement to navigate the evolving landscape effectively. Those who invest in training and system enhancements will support brokers better and ensure smoother transitions for all stakeholders.
Addressing these challenges can benefit brokers, lenders, and clients and foster a more collaborative and efficient environment in the industry.
Buy-to-Let Interview | Facing challenges with remortgaging?
Many buy-to-let mortgages are maturing this year, raising questions about remortgaging challenges. Concerns focus on whether new regulations could hinder landlords or clients seeking refinancing options. However, while the market presents challenges, it also offers viable alternatives for borrowers.
It’s important to clarify that widespread fears about remortgaging restrictions are largely unwarranted. Nonetheless, brokers may face a heavier workload navigating these changes. Borrowers could encounter difficulties with traditional lenders, prompting exploring alternative financing solutions. Transitioning to options like five-year fixed mortgages, income-based top-slicing, or second-charge loans might prove effective.
Buy-to-Let Interview | Moves towards limited company
Recent regulatory changes in the UK mortgage market have led landlords to favour the limited company model. These changes, especially in tax policies, encourage landlords to explore restructuring their portfolios through corporate frameworks. Many are consulting with accountants to understand the financial implications and plan effectively.
The evolving tax environment has significant implications for investors with substantial property holdings. For example, a landlord with 40 properties must evaluate how a limited company structure might affect their portfolio’s performance. This shift requires careful consideration, particularly regarding long-term financial benefits and potential challenges.
Interestingly, the trend among serious investors highlights strategic planning. Many landlords assess when transitioning to a limited company structure becomes most cost-efficient. While some decisions may be made now, implementing these changes often takes time. Projections suggest a gradual adoption over the next one to two years, influenced by ongoing tax policy developments.
The UK real estate investment sector is transforming. Landlords’ responses to these changes will be closely monitored, offering insights into future trends. This shift could redefine investment strategies as the market adapts, particularly for those with significant portfolios.
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