Current changes in the buy-let-sector should be advantageous to brokers, according to David Whittaker, managing director of Mortgages for Business.
He told the Financial Services Expo (FSE) Manchester that 93% of all buy-to-let business comes via the intermediary sector and that the increased complication involved with writing buy-to-let business means advisers should be in the driving seat.
Whittaker said: “Brokers can certainly profit [from these changes] as they are much more fleet of foot than lenders. You have the opportunity to be the biggest winners out of these changes.”
However, Whittaker did warn advisers that with greater requirements from lenders in terms of borrower income details and a growing increase in workload, now might be the time to push lenders for larger fees.
He said: “Advisers need to remind lenders that the new market involves lots more work and you deserve to get paid for it.”
Whittaker described the likely measures to come out of the FCA’s CP11/16 on buy-to-let mortgage underwriting as “MMR on speed” warning advisers they will “have to collect shed loads of income data from your customers”. He said while, in the past, buy-to-let mortgages might have been something advisers could have sorted out over a cup of coffee, from now on they would be getting “all your attention”.
Whittaker outlined a number of potential worries for buy-to-let advisers in the future with the potential changes to lenders’ underwriting standards including how they might maintain lender and compliance requirements around:
- The visibility of borrower’s income and validating that income.
- Potential discrepancies in borrower’s tax returns.
- Having the required portfolio data for professional landlords.
Looking at the future of the buy-to-let market and the anticipated gross mortgage lending figures and lender activity, Whittaker asked the audience to predict what the lending figures might be like for 2016. 63% suggested it would hit the same figure as 2015, £35 billion, while 27% thought it would inch up to £37.5bn.
Whittaker said: “I would be happy with £35bn again because I think it would send a message to [Chancellor George] Osborne that the market has listened, the buy-to-let sector has listened and we’ve toned it down a bit. However, IMLA are predicting £43bn and if it does go to this level you can expect all the regulators to revisit us. £35bn might get Osborne off our backs.”