The plethora of forecasts that come out around this time of year make for interesting reading (and often headlines) but I’ve often thought that forecasting on a wide scale often left you on a hiding to nothing. Get your forecast right and everyone will suggest it was obvious and simple common sense, get it wrong and the chattering classes will no doubt have a field day at your apparent ineptitude. Quite frankly, it often doesn’t seem worth the bother.
However – and be aware there are forecasts of sorts contained within this article – given that I am CEO of a buy-to-let and specialist lender I would have to be some kind of lunatic not to have a view on where, in particular, the buy-to-let market was heading and the future obstacles and opportunities we might encounter.
Given that we are a newly-launched buy-to-let lender it will not take a genius to work out that we certainly feel positive about the buy-to-let market. Even if I thought the lending levels in the sector were going to stay pretty stable – I happen to believe they will rise – given the nature of our proposition, the team within the business, the relationships we have, our overall offering etc I still believe we could lend at strong levels and take the market share we are looking to take.
But, this is not often a particularly well sought-after view. Instead, there tends to be a clamour for ‘what will happen in the market?’ This will begin with the de rigueur first question of almost every panel debate I have seen in the last five years, namely, what do you anticipate this year’s gross lending levels will be, and specifically what will they be for the buy-to-let market? If someone were to open the questioning in any future debate without recourse to those questions, I would happily shake their hand at the end of it.
I can understand why there is interest in overall lending levels. It gives the audience an easy figure to hang their hats on and ultimately it may give provide an idea of what their business might be able to achieve. But, certainly for intermediaries, I often think that, even if gross mortgage lending levels were predicated to increase by 50% next year, the major point for them is to make sure they secure a slice of that increased business. They could rise by 100% next year but if you’re not able to secure any of it, then what does it matter?
For what it’s worth however, I do believe lending levels will rise in the buy-to-let market next year. The demand is there and growing, the demographics of the UK support it, lender appetite has grown with new and existing lenders being added to the mix, plus the market has also just benefited from the Autumn Statement stamp duty sweetener which I’m sure will have a positive impact, at least in the very short-term.
All this means that I tend to agree with the CML’s recent forecast document which said it expected ‘to see further expansion of buy-to-let activity, relative to gross mortgage lending and the volume of property sales, over time’. It did however also outline that the buy-to-let market is perhaps on the radar politically, economically and in a regulatory sense like never before, and this means that it’s difficult to say what outside influences might be placed on it in the months and years ahead.
Certainly, we know of the European Mortgage Credit Directive and its regulation of ‘accidental landlord’ but on a far greater scale I think we will all be waiting with some interest for HM Treasury’s review of the buy-to-let market which is due to be published in 2015. This is likely to be the defining document on the buy-to-let market and I think most believe it will shape our sector’s regulatory direction for some time to come. The direction of travel is however, at this time, unknown.
So, while there is much to be positive about when it comes to the buy-to-let market, chief among them the ongoing demand from new and existing landlords to be active, we should all be aware of what might be coming over the horizon. That said, this is an incredibly exciting time to be involved not just in Fleet Mortgages but the sector as a whole and therefore 2015 is without doubt a year we can’t wait to get started.
Bob Young is chief executive officer of Fleet Mortgages