"Just as we’re finding in the residential market, mortgage brokers are increasingly helping landlords with specialist BTL mortgages either because of the properties they’re buying and refinancing, or their own circumstances"
- Buster Tolfree - United Trust Bank
According to research carried out for United Trust Bank Mortgages' new white paper, 58% of brokers operating in the BTL space have more landlord clients who want to expand their portfolios than sell properties.
UTB’s new white paper looks at the health of the specialist mortgage sector two years after its inaugural report and this time included research on the specialist BTL market.
The BTL market is not as quiet as many media reports have suggested
Feedback from brokers who took part in the research was that whilst the BTL market was not as buoyant as it was before interest rates were rapidly increased, there were still lots of opportunities with activity in the market not as poor as often suggested in the media.
When asked if their BTL business had declined in the previous 6 months, 60% of brokers responding disagreed, and only 32% of brokers said that most of their BTL business was Product Transfers.
However, 61% of brokers felt that landlords with just one property were more likely to exit the market than those with BTL portfolios.
Matthew Arena of Brilliant Solutions went as far as saying “Larger portfolio landlords are very positive. They are cash-rich and waiting for opportunities.”
Landlords are seeking higher yields
65% of brokers said that landlords expanding their portfolios were often considering more unusual and higher-yielding properties including Houses of Multiple Occupancy (HMOs) and Multi Unit Blocks. Specialist BTL lenders, including UTB, are able to help with these purchases but also with more unusual property types and those of non-standard construction as well as those near or touching commercial.
One broker from Surrey said, “Clients are looking for more quirky properties”, whilst another broker from Bucks said, “Corporate lets – this market is growing”.
UTB Mortgages’ 2024 white paper looks at trends in the specialist residential and Buy-to-Let mortgage market as well as second-charge loans. It examines the lending landscape and reveals broker views on challenges they face potential areas of opportunity for growth, and the importance of education and collaboration between lenders, distributors, packagers and brokers.
Over 130 brokers took part in quantitative research and this was followed by a number of deep-dive calls with individuals to obtain a more detailed understanding of the data collected. Prominent industry figures including Stephanie Charman, Group Partnerships and Propositions Director at Sesame Bankhall Group, Liz Simms, Managing Director of Connect Mortgages, William Lloyd-Hayward, COO of Brightstar Financial, and Matthew Arena, Group Managing Director at Brilliant Solutions were among those who took part in interviews relating to the research.
The report also includes independent research from the Office of National Statistics, Registry Trust, UK Finance and the Insolvency Service.
Buster Tolfree (pictured), Director of Mortgages at United Trust Bank commented: “Just as we’re finding in the residential market, mortgage brokers are increasingly helping landlords with specialist BTL mortgages either because of the properties they’re buying and refinancing, or their own circumstances. The great news for brokers is that there are a growing number of specialist mortgage lenders, UTB included, who can cater to them.
“Even more pleasing is that most brokers are still finding opportunities in the BTL mortgage space, and this reflects our own experience over the last year. Landlords are looking to acquire more unusual types of properties in locations which may not suit homeowners but nonetheless make great rental properties, for example, flats over or next to commercial. These purchases often deliver higher yields than a traditional 3-bed semi and help to mitigate the higher cost of borrowing.
“At UTB our BTL mortgage sales are, to date, c.35% higher than for the whole of 2023, and applications c.53% up in the same period which shows that there’s demand and that brokers like what we’re doing.”
