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Buy-to-let Watch Episode 6 | Importance of Investor Strategy

Buy-to-let Watch Episode 6

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: “Recently, I participated in several industry events. There’s a noticeable eagerness among mortgage professionals to reengage in networking activities.

This eagerness extends to buy-to-let (BTL) investors, as seen at a recent property investor show. The two-day event, which was aimed at consumers, was bustling with activity.

It was my first face-to-face interaction with BTL investors since the pandemic began. I was curious about the attendees, their profiles, and the variety of investors present.

To my surprise, the event was well attended by enthusiastic individuals. Thousands of property investors were eager to expand their BTL property and finance knowledge.

The energy and turnout underscored a collective thirst for information within the BTL investment community. This added an optimistic note to the resurgence of networking activities in the mortgage industry.

This experience emphasised the market’s resilience and ongoing vitality 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 was a shared eagerness to learn and expand their property portfolios.

Engaging with these investors brought back memories of my advisory days when I assisted 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.

Understanding their objectives, such as whether they aim for immediate income, retirement income, or capital growth, is paramount. 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. Given their funding structures, this is especially pertinent to many specialised Buy-to-Let (BTL) lenders, which could potentially lead to client dissatisfaction down the line. Buy-to-let Watch Episode 6.

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

It is crucial to initiate discussions with investor clients about green mortgages and EPC requirements. From 2025, new tenancies must have ratings of A to C. By 2028, this regulation will apply to all tenancies.

When securing a five-year fixed rate today, clients may need to improve properties to meet EPC standards. However, funding these upgrades might pose financial challenges and complicate their financial situation.

It’s optimistic that more lenders will innovate within the Buy-to-Let (BTL) market to meet EPC requirements. A few BTL lenders are pioneering various product incentives, including rate reductions and cashback. This signals a shift towards a more environmentally conscious lending landscape. Staying attuned to emerging offerings is essential. This ensures clients make informed decisions aligning with financial and environmental goals.

At present, only a few BTL lenders offer product incentives, ranging from rate reductions to cashback.

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

Buy-to-let Watch Episode 6 *Details correct as at 25/10/21

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

om the table, it’s clear that most lenders offering environmentally friendly mortgages provide enticing cost savings compared to conventional loans. For instance, Paragon offers a green mortgage for each standard product, featuring a 0.1% reduction.

Financial advisors should now promote these innovative mortgages to their Buy-to-Let (BTL) clients. This can help them effectively navigate upcoming regulatory changes.

Implementing this strategy can yield significant rewards when working with property investors. Financial advisors can understand their unique needs and goals by building a close relationship with investor clients. This positions them as crucial partners in their ventures.

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Moreover, assisting clients in building portfolios offers a notable advantage. It can lead to a consistent stream of mortgage transactions every few months rather than every few years.

Seizing these opportunities ensures financial gains and fosters lasting relationships with clients. This is crucial in the ever-evolving property investment market.

We have reached the end of Buy-to-Let Watch Episode 6 | Why Investor Strategy is Important. Until next time, stay “Connect”!

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