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A view on the future of buy-to-let

Industry experts have predicted complex buy-to-let lending is likely to increase following the introduction of tougher underwriting standards under new guidelines.

The latest Prudential Regulation Authority (PRA) changes, which stipulate more robust underwriting checks for portfolio landlords – those with four or more mortgaged buy-to-let properties – will come into force on 1st October.

They are designed to ensure a better standard of business – driven by more responsible lending – to create a more “professional” sector.

Meanwhile, the Office for National Statistics forecasts an 8.4 million rise in the UK’s population over the next 22 years, eventually reaching 74 million in 2039, signalling the need for more private rented homes. This growing demand for housing will need to be met and I believe this will offer opportunities for this new professional type of landlord.

We have already seen a major shift across the buy-to-let market, with more portfolio landlords looking to invest in different types of properties such as houses in multiple occupation (HMOs) or semi-commercial property, such as a flat above a shop, for example.

Because of the complex nature of these situations, mainstream lenders may be reluctant, or unable, to provide funding, particularly after the new PRA rules are introduced, and some people are predicting they may leave the market altogether.

However, specialist lenders such as Together are in a great position to fill this void. We have a strong reputation for our commonsense lending, and have been recognised as a leading finance provider in the buy-to-let sector, having won two industry awards in the past eight months.

Our underwriters in this field have a vast knowledge of the market, are well prepared for the coming regulatory changes and work closely with our broker partners to explain our products and processes.

To underline our continued confidence in buy-to-let, we launched a specialist product range in June aimed at landlords and investors with multiple properties, as well as those wanting to secure finance on HMOs or semi-commercial properties. We’ve also increased the maximum loan size on first charge mortgages to £2m (£500,000 on second charges) because of the growing demand for larger loans.

These latest improvements are clear evidence we are committed to enhancing our products in line with the needs of the buy-to-let market as it continues to evolve.

Sourced from:  Bridging and commercial.