Bob Young,managing director of CHL Mortgages, is in a campaigning mood
Our recent CHL Landlord Survey served to underline the growing confidence being exhibited by landlords not just about the future of the buy-to-let market but also their place within it. 72% of all respondents said they saw a positive future for buy-to-let, which just happened to be the healthiest figure we have recorded since we began the survey a few years ago.
Indeed, this overall positivity about the sector also fuels landlords’ intentions towards their own portfolios with 35% of respondents suggesting they will buy further investment properties in the next 12 months. This was up from the 33% who said the same back in the summer.
While it is good news that over a third are looking to purchase, one wonders what the numbers would be like if we could somehow square the finance circle. 40% suggested what was, and is, holding them back from either mortgaging or remortgaging is the lack of available finance, and even with a number of high-profile lender entrants coming to market during 2011 it still seems to be the case that the professional landlord market is under-served.
More new buy-to-let lenders are expected during 2012 which is clearly heartening for all concerned, but one wonders how many of them will be fully focused on those with portfolios. Potentially those ‘amateur landlords’ with two/three/four properties may have more choice than those who do this for a living. Wouldn’t that be rather perverse?
Already professionals are having to jump over financing hurdles because they have more exposure to the market than some lenders would like. However, what is the true risk to lender? Surely, with proper due diligence completed on the landlords’ part and proper underwriting of the deal from the lender, it should not matter whether the borrower has three properties or thirty? Then again, I can understand the reticence of some lenders not to be caught with the buy-to-let lending equivalent of their pants down, should the market turn as it did in 2007/08.
I am also keen to see more lenders developing their offerings in terms of properties like HMOs – at the moment I see few products available and a tendency to shy away from this type of deal because of the perceived complexities involved in it. This is certainly a shame as quality HMOs are likely to increase in number as more developers/landlords see the growing opportunity in multiple residential lettings.
Therefore, today marks something of a campaign for yours truly. A clarion call if you like to both existing lenders and those considering offering buy-to-let products. It is to consider the professional landlord in today’s market and to review whether enough is being done to support him or her with both market advice and available products.
While I fully appreciate the need to bring in new landlord blood to the marketplace, it is the professionals who have the know-how and experience to deliver in terms of property supply. The question is whether they’ll have the available finance to fulfil that function – at present the jury is out however with renewed vigour and focus the pros should be able to deliver real value for themselves and lenders.