According to specialist buy-to-let broker, Mortgages for Business, the planets don't have to align for landlords to expand their portfolios without the chaos caused by residential buyers trying to beat the stamp duty deadline. Just use a few simple tricks.
The firm is highlighting four key pieces of advice to help new purchases complete in the face of mounting chaos fuelled by the stamp duty holiday: Be prepared to rethink location; Choose a broker offering a portal; Carefully consider the type of property you are investing in, and Pick the right lender.
Mortgages for Business says if landlords consider all four of these factors, they could get their transactions completed in spite of the chaos affecting the market - as a slick purchase could take just 53 days to complete.
In July 2020, the Chancellor raised the stamp duty threshold to £500,000, from £125,000 in a bid to boost the economy amid the pandemic and stimulate the housing market following the first lockdown. The “stamp duty holiday” has helped drive up the number of transactions to the extent that the extra business has inundated some lenders.
As a result, the broker is urging landlords to consider 4 factors to increase their chances of getting a deal through:
1: Look at your location in a new light
Mortgages for Business says even lenders still capable of doing deals in sensible timeframes are struggling to get mortgages approved where local authorities are dragging their feet. The slowest local authorities are now taking more than 100 days to undertake property searches, a key element of the conveyancing process, as the surge in transactions coincides with pandemic-related staff shortages.
Mortgages for Business highlighted Hackney Borough Council (180 working days), Bedfordshire Council (65 working days), Caerphilly County Borough Council (60), Cambridge City Council (50), and North Warwickshire (50) as the worst performers.
Jeni Browne, director of Mortgages for Business, comments: “Landlords who just want to get a purchase done are sick of the stamp duty rush. If you have the option, you should consider the effect that the local authority you are dealing with could have on your purchase. One search we ordered recently took 145 days to complete. If you are considering purchasing a property in Hackney before the turn of the next century, you may want to rethink."
2: The importance of portals
Data from the firm’s landlord portal shows that it takes less time to process applications if they’re done via portals with average deadlines shortening by 20 days, from 73 working days to 53 - cutting down the time it takes to process a transaction by 27%.
Jeni Browne, said: “Portals offer clients a space with clear to-do lists, including which documents are required to move the application forward, and the ability to upload all documents quickly and securely, there and then. While this research is based on our data, I’m sure we’re not the only broker with a good portal. My advice to landlords looking to take control of their own destiny is to use a specialist buy-to-let broker with portal technology. It is a very simple way to shave a couple of weeks off a buy-to-let property transaction.”
3: Choose the right property
Mortgages for Business says not all property purchases are created equal and that transactions can take 11% longer if the property in question is a flat, rather than a semi-detached house.
Jeni adds: “Even if you’re not trying to hit the stamp duty deadline, you may well find that your deal gets caught in the crossfire. Picking a semi-detached house, rather than a flat will help smooth the way.”
4: Choose the right lender
The specialist buy-to-let broker also took the opportunity to warn landlords that more than half the BTL lenders who are actively lending at the moment are capable of doing a deal within the usual industry average. Those purchasing vanilla properties can expect an estimated normal eight week completion time.
Jeni concludes: “Most lenders are still quoting application-to-offer times of about three weeks which doesn’t sound too long. But the reality is that these timeframes are not being met. To get deals down relatively quickly, you need to avoid lenders that are dragging their feet. While we’re not lenders in our own right, we can ensure landlords are using the right lender.
"Go to the wrong one and you could find yourself dealing with a lender that is taking weeks to respond to enquiries."
