Mortgage brokers are concerned about the growth potential for the BTL market over the course of 2016, according to new industry research carried out by NatWest.
66% of the 441 intermediaries that took part in the survey used in the research said there has been an increase in demand for buy-to-let mortgages over the last six months, with only 7% of customers experiencing a decline.
An Increase in Buy-to-Let Business
Just over 32% of those surveyed expect to see an increase in buy-to-let business over the first and second quarter of this year, while 41% expect a slight decline. 27% believe that the market will remain largely unchanged over the period in focus.
Looking at the type of customers brokers are dealing with, the survey shows a polarised market. 19% of brokers said that most of their buy-to-let business is with professional landlords while 55% of them do a small amount of business or no business at all with the professional sector.
37% of respondents said the best prospects for growth are seen in remortgaging and 23% said the prospects for growth is higher in the amateur landlord sector. 18% said amateur landlords with more than 2 properties are the next most attractive sector and only 11% believed that professional landlords offer the best prospects.
Professional Landlords Offer the Best Prospects
So much has been made about the potential of the Landlord sector but only 4% of brokers believe that the sector offers a decent opportunity for growth in the near future.
Addressing the issues concerning landlords, 59% of respondents pointed at increased regulation as the chief bone of contention. This is followed by both rental voids and rental arrears at 35% and 34% respectively. 20% of respondents pointed at cost of property maintenance as a concern while 13% mentioned tenant referencing and administration as a concern.
The brokers that responded to this survey mentioned good BDM support, flexible underwriting, straightforward rental cover calculation, clear lending criteria and availability of interest only as the most important aspects of a lender’s buy-to-let proposition.
Analysing the Results of the Survey
Analysing the results of the survey, the general consensus in the industry is that the buy to let market will remain attractive for mortgage brokers. There is however concern about the extent of growth as uncertainty remains on what the new tax rules for landlords, the new Mortgage Credit Directive and the Government’s renewed attention on home ownership will mean for the market in the long run. This is why the wait and see approach seems to be the preferred option for many, with a view to allowing the new factors bed in before making any decisions.
The survey also highlights the fact that brokers are looking towards lenders for lending criteria without complications, availability of interest only and good BDM support. Many lenders understand the difficulty in providing such conditions and therefore, some of them have shown efforts towards making subtle changes to their business process to meet these needs.
