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Buy-to-Let Watch Episode 3 | The Innovation Game Uncovered

Buy-to-Let Watch Episode 3

Buy-to-let watch episode 3

Liz Syms
Liz Syms, CEO and Founder of Connect Mortgages


In the last episode of “Buy-to-Let Watch “Why Landlords Should Select Lenders Carefully, the primary discussion revolved around the importance of landlords carefully choosing lenders. In today’s instalment, the focus shifts to the innovation game. Buy-to-Let Watch Episode 3

Amid an intensely competitive buy-to-let market, financial institutions consistently use innovative practices to enhance their market presence. Noteworthy developments include the integration of Vida, Fleet, Together, and Zephyr into eTech’s BTL hub, a strategic move aimed at streamlining the underwriting process for portfolio landlords.

The landscape is further evolving as lenders adjust their criteria, opening up new avenues for investment in specific market segments. A positive trend is evident as Foundation Home Loans now entertains BTL remortgages even before a property has been owned for six months.

Similarly, Fleet has extended its standard BTL rates to encompass two-unit multi-unit freehold block properties, presenting investors with a more cost-effective option.

This proactive approach by lenders facilitates a faster underwriting process and broadens the scope of available products in the market. Investors are encouraged by these adjustments, as they not only signify a response to market demands but also contribute to a more dynamic and accessible buy-to-let landscape. Buy-to-Let Watch Episode 3 | The Innovation Game Uncovered

Buy-to-let watch episode 3 | Expanding Markets and Innovations

Numerous financial institutions have enriched their services by venturing into markets like MUFB, leading to a surge in occupants for house-in-multiple-occupation properties. Additionally, these lenders have broadened their scope to include expatriates, holiday lets, and properties following the Airbnb model.

While these enhancements undoubtedly benefit our clientele, there is room for further groundbreaking developments in the lending landscape. It is imperative for lenders to introduce truly innovative solutions to meet the evolving needs of borrowers.

Remarkably, a handful of lenders have recently unveiled intriguing products, exemplified by Hampshire Trust’s five-year fixed-rate offering. What sets this product apart is its unique feature of having only a two-year early repayment charge. This distinctive approach allows landlords to secure loans based on the five-year rental calculation, providing them with the necessary financial flexibility to navigate the market’s uncertainties.

To foster a more dynamic lending environment, it is crucial for financial institutions to continue pushing the boundaries of conventional offerings and explore inventive solutions that cater to the diverse requirements of borrowers. Buy-to-Let Watch Episode 3

Buy-to-let watch episode 3 | Exploring innovative options in property refurbishment financing

The refurbishment buy-to-let (BTL) market has been revolutionised by Precise’s popular BTL offering, which provides landlords with a secure exit strategy and upfront certainty regarding potential capital raised upon successful completion of the planned work.

In a strategic move, Clydesdale has entered this competitive arena with a unique bridge-to-term solution. It introduces the possibility of a residential mortgage as an alternative exit term loan, offering increased flexibility to clients.

Kensington has brought a fresh perspective to the BTL portfolio landscape by interpreting the Prudential Regulation Authority (PRA) portfolio rules. A noteworthy feature is excluding properties held in separate legal entities when determining portfolio landlord status.

This means that clients holding a mix of properties, some in their own name and others through a limited company, can avoid being classified as portfolio landlords.

For example, a client with 10 properties in their name but acquiring their first property through a limited company would not fall into the portfolio landlord category. Consequently, such clients can enjoy the streamlined underwriting process designed for non-portfolio landlords, simplifying their financing journey.

This nuanced approach enhances the appeal of BTL financing for a diverse range of property investors.  Buy-to-let watch episode 3

Buy-to-let watch episode 3 | Innovative approaches in buy-to-let: A look at West One, Lendco, and Precise

West One has introduced a groundbreaking approach by leveraging the expedited legal procedures typically associated with second-charge loans and applying them to buy-to-let (BTL) remortgage. This innovative utilisation of the fast-track process efficiently accelerates BTL refinancing for clients, even in cases involving capital raising.

Lendco, on the other hand, stands out by offering loans tailored for holiday lets, where affordability is gauged based on the income generated from holiday rentals rather than the conventional assessment applied to standard BTL properties.

Unlike most BTL lenders, which evaluate such properties by considering the rent for a standard tenancy agreement, Lendco adopts a unique approach. For refinancing, they calculate affordability based on the average of last year’s business profits, while for purchases, they factor in projections provided by a holiday letting agent.

Precise has introduced an income-based BTL option, enabling investors with surplus income from their portfolios to offset rental shortfalls on the new mortgage. This flexibility empowers landlords to opt for two-year fixed rates rather than committing to lengthier five-year fixes.

The forward-thinking initiatives taken by lenders like West One, Lendco, and Precise demonstrate a keen understanding of the market’s dynamics and the evolving needs of landlords.

Anticipating further developments in this direction is an exciting prospect as these financial institutions continue to adapt to the changing landscape of the property investment market. This ends our Buy-to-let watch episode 3 | The Innovation Game Uncovered. Until next time, stay “Connect!”

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