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Buy-to-let Watch Episode 6 | Why Investor Strategy is Important

Buy-to-let Watch Episode 6

Liz Syms

Liz Syms, CEO and Founder of Connect Mortgages


We thoroughly enjoyed our last feature, “Buy-to-Let Watch Episode 5 | Survival of The Biggest”, and now, desiring to offer our readers a varied subject, we aim to delve into  Buy-to-let Watch Episode 6 | Why Investor Strategy is Important in today’s discussion.

Liz Syms: “In recent times, I’ve had the opportunity to participate in numerous industry events, and there’s a noticeable eagerness among mortgage professionals to reengage in networking activities, myself included.

This sentiment extends to buy-to-let (BTL) investors, as exemplified by the bustling two-day affair at a recent property investor show aimed at consumers.

This particular event marked my initial face-to-face interaction with buyers to let investors since the onset of the pandemic. It sparked my curiosity about the attendees—identifying their profiles, discerning the variety of investors present, and assessing their levels of expertise.

To my pleasant surprise, the event was not only well-attended by those enthusiastic about resuming in-person interactions, but it also drew thousands of property investors keen on expanding their knowledge in the realms of BTL property and finance.

The palpable energy and turnout underscored a collective thirst for information within the BTL investment community, adding an optimistic note to the resurgence of networking activities in the mortgage industry. This experience emphasised the resilience and ongoing vitality of the market despite the lingering challenges posed by the pandemic.”

Buy-to-let Watch Episode 6 | Insights from portfolio landlords to aspiring property enthusiasts

The event showcased a diverse array of investors, ranging from individuals with extensive portfolios, including one with over 100 properties, to developers seeking funding for development and refurbishment projects.

Notably, the non-portfolio investors with one to three properties were a significant presence at the gathering. Despite their varying experience levels, a common thread among them was a shared eagerness to learn and expand their property portfolios.

Engaging with these investors brought back memories of my advisory days, assisting clients in building their portfolios and navigating the intricacies of property investment.

Guiding investors in formulating a strategic investment plan is crucial for securing appropriate financing for each property and establishing a lasting advisory relationship.

It is paramount to understand their objectives, such as whether they aim for immediate income, retirement income, or capital growth. Additionally, delving into their tax position and future changes and determining the number of properties they intend to acquire over a specific timeframe are vital strategic inquiries. Addressing these aspects ensures tailored solutions that align with their goals.

For instance, numerous property investors prefer enhancing the value of their existing portfolios through development and refurbishment. Extracting this added value can serve as a deposit for subsequent property acquisitions.

Failure to grasp these nuances as an advisor may inadvertently lead clients into long-term commitments with limitations, such as a five-year fixed rate with ERCs, particularly with lenders that don’t offer additional advances or permit second charges. This is especially pertinent to many specialised Buy-to-Let (BTL) lenders, given their funding structures, potentially leading to client dissatisfaction down the line.

Buy-to-let Watch Episode 6 | Educate your portfolio landlords on green mortgages and EPC requirements

Initiating discussions with your investor clients regarding the significance of green mortgages and the impending implications of Energy Performance Certificate (EPC) requirements is crucial. Beginning in 2025, new tenancies can only be granted to properties with ratings of A to C, a regulation set to encompass all tenancies by 2028.

As you assist clients in securing a five-year fixed rate today, the necessity for property improvements to meet EPC standards may arise. However, funding these necessary upgrades might pose a financial challenge for your clients, potentially complicating their financial situation.

It’s optimistic that more lenders will embrace innovation within the Buy-to-Let (BTL) market to align with EPC requirements. A limited number of BTL lenders are pioneering various product incentives, ranging from rate reductions to cashback, signalling a potential shift towards a more environmentally conscious lending landscape. Staying attuned to emerging offerings in this evolving space is essential, ensuring that your clients can make informed decisions that align with financial and environmental goals.

At the moment, we are just looking at a handful of BTL lenders offering some form of product incentive ranging from rate reductions to cashback as below:

Lender Rating Rate Rate type LTV Incentives
BOI A-C 1.76% 2-year fix 60% Lower rates
BOI A-C 2.12% 5-year fix 75% Lower rates
Foundation A 3.14% 5-year fix 75% Lower rates and £750 cash back

Less attractive options for B&C ratings

Foundation A 1.99% 2-yr variable -no ERC 75% Lower rates
Kensington 4.34% 2-year fixed 80% £1000 cashback if rating improved in 12-months from completion
Landbay A-B 2.89% 5-year fixed 70% Lower rates

Slightly higher for C rating

LendInvest A-C 2.88% 5-yr fixed 65% Lower rates and fees
TMW A-C 2.24% 2-yr fixed 80% 80% only available for A-C ratings
Paragon A-C 3.99% 5-yr fixed 80% Lower rates

*Details correct as at 25/10/21

Buy-to-let Watch Episode 6 | Opportunities for property investors

connect for intermediariesFrom the table above, as you can see, most lenders in the market offering environmentally friendly mortgages present an enticing proposition by providing cost savings compared to their conventional loan options. A notable example is Paragon, which extends a green mortgage counterpart for each standard product, featuring a 0.1% reduction.

The moment has arrived for financial advisors to actively convey these innovative mortgage incentives to their Buy-to-Let (BTL) clientele, aiding them in navigating forthcoming regulatory changes.

Executing this strategy successfully can yield substantial rewards when collaborating with property investors. Establishing a close rapport with investor clients allows financial advisors to delve deeply into their unique needs and aspirations, positioning themselves as integral partners in their ventures.

Furthermore, a notable advantage emerges when assisting clients in building portfolios, potentially resulting in a consistent stream of mortgage transactions every few months, as opposed to the conventional timeline of every few years. Embracing these opportunities secures financial gains and fosters enduring relationships with clients in the dynamic realm of property investment.

We’ve come to the end of  our Buy-to-let Watch Episode 6 | Why Investor Strategy is Important

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