The thriving specialist mortgage sector has witnessed significant expansion in recent years, navigating the intricate landscape shaped by regulatory and governmental interventions. At the helm of Connect for Intermediaries, as the CEO, 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 buy-to-let 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 now 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 definitely 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
The recent modifications in the industry have led to a significant surge in the amount of work brokers are handling, and according to Syms, brokers should brace themselves for this, especially when dealing with major clients.
For those who have established long-standing relationships with clients, having managed all their mortgage needs over the years, formulating comprehensive business plans is now an added responsibility. Syms suggests that brokers should confidently present these plans to clients and seek their input, emphasising the necessity of adapting to the increased workload.
Most of the increased workload has been shifted onto brokers, making it imperative for lenders to implement measures that facilitate the process. Syms points out that any lenders streamlining procedures to ease the burden on brokers will gain a competitive edge in the industry.
One particular area of concern is the inflexibility in background portfolio assessments and calculations. Syms desires lenders to adopt a more flexible approach, especially for landlords who previously secured deals under pre-PRA conditions. Despite having significantly higher rental income than mortgage payments, these landlords face challenges due to rigid background checks imposed by some lenders.
Syms highlights the success of lenders who have adjusted their background calculations to consider a broader spectrum of financial scenarios, such as ensuring that rental income surpasses mortgage payments. This adaptability is proving advantageous for those lenders who have embraced it.
Despite lenders attempting to provide clarity, there remains a challenge in conveying the intricacies of the new processes. Syms raises concerns about the readiness of some lenders’ staff to handle the heightened complexity and level of underwriting involved.
She notes that peculiar questions from underwriting departments are not uncommon, and there is a perception that certain lenders are putting in more effort than others to navigate the evolving landscape. This underscores the need for continuous adaptation and improvement within the lending industry to ensure a smooth transition for all stakeholders involved.
Buy-to-Let Interview | Facing challenges with remortgaging?
With a surge of buy-to-let mortgages reaching maturity in the initial half of the year, concerns arise about clients and landlords potentially facing restrictions on remortgaging due to new regulations.
The concise response is no, there isn’t significant fear. However, it could lead to an increased workload for brokers. Exploring traditional lenders first and facing rejection might prompt borrowers to explore alternative options available in the market. Options such as opting for a five-year mortgage, exploring income-based top-slicing, or considering a second charge could be viable alternatives.
While it shouldn’t necessarily pose a problem, the process might become more intricate, necessitating additional advisory input. Therefore, borrowers may find it beneficial to seek more comprehensive advice to navigate through these potential complexities.
Buy-to-Let Interview | Moves towards limited company
We have learned throw this buy-to-let interview that the recent regulatory alterations have sparked a trend among landlords, leading them towards embracing the limited company model. The anticipation is that these changes, particularly in tax policies, will prompt many landlords to consult with their accountants about restructuring their property portfolios within a corporate framework.
Due to the evolving tax landscape, many clients are deliberating the strategic move to a limited company structure. The implications are profound, especially for investors with substantial property holdings. For instance, a client with a portfolio of 40 properties faces critical decisions that could significantly impact their business.
The dynamics of this shift within the serious investor market are intriguing. The ongoing discussions with accountants suggest that many landlords are strategising the optimal timing for the transition, aligning it with the period when it becomes most cost-efficient. However, the actual implementation of these decisions might unfold gradually, with projections indicating a one to two-year timeline, allowing for careful consideration of the evolving tax landscape and its financial implications.
The landscape is poised for a notable transformation, and the outcomes of these strategic decisions will be closely observed to gauge their impact on the real estate investment sector.
We have come to the end our our Buy-to-let interview!