At the moment it feels very easy to talk about the interventionist measures in the buy-to-let market, to talk about the negative impact they are having/have had, to talk about a seemingly put-upon sector which many apparently want to destroy, to talk about landlords as being responsible for the housing crisis, and to talk about anyone involved in buy-to-let as somehow the enemy.
I’ll freely admit that when faced with this it’s hard not to go on the defensive – especially as a major stakeholder in the sector and one that wants it to do well, that believes it has a vitally important role to play in the UK’s housing market, and genuinely believes that the ‘housing gap’ would be far worse were it not for the PRS.
However, at some point, you simply have to accept that we are not flavour of the month, that in a very narrow, simplistic political narrative it curries favour with certain groups to suggest that it’s all ‘buy-to-let/landlord’s fault’. And from this, we have been subject to all the measures that everyone will know about – increased stamp duty, tighter underwriting, tax relief changes, etc.
That said, underlying all of this – and perhaps this was shown in its fullest in the pre-stamp duty change period – we have an asset class that is a sound investment and we have a demand from people who want to purchase buy-to-let properties and who will require mortgage finance to do this, and who have existing loans that they are going to want to refinance.
Now, because of all the upheaval, we know there are landlords who are either going to make their exit, or are not going to add to their portfolios. On the flip side, there are those who have, or want to build, portfolios and while the ‘maths’ might be a little more difficult to make work, that’s not really going to stop them from doing this. It may take them a little longer to get there – and I think the slowdown in purchase activity shows this – however they will still be purchasing in the future.
And that’s important for advisers to recognise and to tap into, because it might be very easy to look at everything swirling around the sector and decide that its salad days are over and therefore it’s not worth seeking new clients, servicing your existing ones, and/or keeping up to date with what is going on in the marketplace. That’s a decision you shouldn’t be making because – and again I think the upturn we’ve seen in the last couple of months proves this – the demand remains in place and, let’s be honest specialist advice in this area is needed more than ever.
I think, as a momentous year draws to a close, that it’s crucial advisers don’t lose sight of the marketplace, the product availability, the current pricing, the opportunities that exist in areas like limited company buy-to-let and/or HMO, because despite what is coming over the horizon, landlords are going to want to make their existing portfolios work, and if they are keen to expand, they’re going to need all that support and advice when it comes to purchasing. Especially if they’ve always purchased as an individual but, having taken tax advice, it now appears to be a better bet for them to purchase in the future via a limited company.
Essentially, what we’re saying is that the buy-to-let market did not end in 2016 – I seem to have said this many times over the past 20 years, but news of its death is greatly exaggerated, and I’m of the opinion that if it was able to bounce back from the Credit Crunch, then quite frankly, this is a mere fly in the ointment.
We certainly remain completely committed to the sector, we have an appetite to lend and as a specialist lender we are keen to help intermediaries in the new buy-to-let era, which will start next year. We also believe there is a healthy market for all stakeholders, especially advisers. So, keep in there, continue to seek out and service new and existing clients, and make your play for what I believe will remain a profitable market for many years to come.
Bob Young is chief executive officer of Fleet Mortgages