(Buy to) Let it Go
The Buy-to-Let market has undergone a series of peaks and troughs in recent years. The layering of extra regulation, stamp duty surcharges, stricter portfolio lending and the restricting of finance cost relief have all seen landlords feel the pinch. Yet recent figures published by the Bank of England show the share of Buy to Let (BTL) lending has increased for the first time since the start of 2017. Lending to landlords accounted for 14.1% of new loans in the first quarter of 2018, up from 12.6% the three months before.
Much is arguably down to the changes to the definition of portfolio lending at the end of last year, defined by the Prudential Regulation Authority (PRA) as landlords who have four or more mortgaged Buy to Let properties. The result has been a marked increase in limited company lending. In fact, SimplyBiz revealed over two thirds (68%) of brokers expect to write more limited company Buy to Let business this year compared to 2017.
Positive as this trend is, Buy to Let has certainly become more complex than it has been in the past, which opens up even more potential for specialist lending to dominate this space. Investors and landlords are increasingly conscious of the different routes available to them, whilst lenders are becoming more aware of the multiple opportunities that the Buy to Let space presents. This is why, at Kensington, this is an area we have been focusing our attention on and has resulted in a series of changes to our Buy to Let proposition. We’ve introduced a brand new limited company proposition, raised loan values and cut rates, whilst introducing zero completion fee and free valuation product options. We’ve also expanded our lending criteria by reducing our required rental coverage and have introduced a portfolio top-up option to allow income from other properties or personal income, as appropriate, to be used in affordability assessments.
Ultimately, Buy to Let is a fundamental part of our housing market, opening up a form of tenure for those who cannot yet afford, have tied accommodation or choose not to, purchase a home. But investors who want to enter this field need advisers who are not afraid to grasp opportunities. Whilst there’s no doubt that Buy to Let is a more complex market than it has been in the past, the rewards on offer for advisers and clients are clear.