The property investment landscape had undoubtably changed over the last couple of years. The prospects of the ‘dinner party landlord’, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.
In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes.These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.
This explains why, although we are seeing overall landlord numbers drop, the number of homes available to rent continues to increase. Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.
On the face of it, the time is now for the professional landlord.
Yet the reality is that this particular subset of borrowers are not particularly well served by lenders currently. There aren’t really anywhere near enough lenders active in this market who truly grasp what professional investors need from their financing, and how to design products that adequately meet that need. It certainly isn’t an area that mainstream lenders want to touch, preferring instead to stick to the most vanilla of borrowers they can find.
That clear gap in the market is why LendInvest launched into the buy-to-let arena last year.
From our very early days, LendInvest has been built on providing finance to property investors, whether that’s bridging loans or development finance. Expanding that proposition to include a more traditional buy-to-let product range as well makes sense; we understand these borrowers and what they need, and we have the expertise to meet those needs.
Crucially, we have the funding in place to do this. In early November we confirmed a long-term funding facility with Citi in order to support the move into buy-to-let and further extend our array of institutional investors. That diversity of funding is a crucial factor in being able to offer a diverse range of products for brokers and their clients to tap into.
Diversifying into new product areas is never as simple as it looks, even if it is into an area of the market that complements your existing proposition. The key is to get the right people in, to start from a position of strength with staff who completely understand the new area of the market.
One of the common issues that we have heard about from brokers has not just been the poor level of choice, but also the disappointing speed of the process with buy-to-let loans. That’s why we built our first fully online mortgage application tool to go alongside the launch, allowing us to to issue decisions on lending as swiftly as possible.
Meeting the needs of the professional landlords who will dominate the buy-to-let market from this point on is about more than designing competitively priced deals. They expect a speed and level of service that up to now simply has not been available.
Ian Boden is sales director at LendInvest