opportunity knocks in specialist buy to...
TRANSCRIPT
Charles McDowell
Commercial Director, Mortgages
@CharlesRAMcD
Opportunity knocks
in specialist
buy to let
Agenda
• Specialist buy-to-let market overview
• Challenges
• Good news
• But why is it so complex?
• Broker opportunity
• Questions
Buy-to-let market
Net investments down 80%
Driven by less people getting into
Buy to let as a pension strategy.
Some predict mortgage market to hit £38bn
Still a buoyant market, driven by
specialist buy-to-let and portfolio
landlords.
Sentiment remains strong
Two fifths of landlords thought
the size of the market will increase over the
next 12 months. (Down from over half this
time last year)
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
How are landlords set up
55% of landlords still set up as a sole trader
Majority of landlords have 2 – 5 properties
10% set up as limited company
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
Challenges
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
Challenges
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
“Bad
experience
with
previous
tenant”
“Brexit,
increasing
interest rates,
other landlords
exiting, political
uncertainty,
fewer
tradesman”
“Concern
about govt
change and
Mr Corbyn's
views”
“THE
GOVERNMENT”
“I can't be
bothered
with the
aggro”
“Higher tax
rates”
Good news
Over 40% of portfolio landlords expected to increase the size of their
portfolio:
o 64% are planning on buying houses
o 55% are planning on buying flats
o 39% are planning on buying commercial property
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
Good news
Its not all doom and gloom
34% of landlords are looking for a new BTL mortgage
25% will be looking to remortgage existing property
and capital raise
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
Why is it so complex?
Landlords with 11 or more properties consider themselves professional
They have the largest BTL borrowing:
o 23% between £500,000 and £999,999
o 29% between £1,000,000 and £1,999,999
2 in every 5 landlords are planning on buying their
next buy-to-let property through a
limited company structure
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
Why is it so complex?
• Need for top slicing
• Over 50% of landlords have complex employment status
0 5 10 15 20 25 30 35
Other
Part time employee
Self-employed (other)
Full time employee
Self-employed (Landlord)
Retired
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017
What’s the opportunity?
Increased competition
Steady shift to complex/specialist buy-to-let
Move away from sole trader status
Change in portfolio make up and property type
Market factors such as interest rate rises
Sources: Intermediary Mortgage Lenders Association (IMLA) 2018 | Council of Mortgage Lenders (CML) market forecast | Aldermore and Opinion research 2018 and 2017 | Aldermore and
YouGov research 2016 | BDRC landlords panel Q4 2017