The event was chaired by John Wriglesworth, Managing Partner at Instinctif Partners, and was attended by a number of industry experts such as John Heron (Paragon Mortgages); Valerie Bannister (Your Move/ARLA); Richard Dyson (The Daily Telegraph); David Whittaker (Mortgages for Business); and Professor Michael Ball (University of Reading).
Professor Ball said that the current situation as ‘rosy’, notwithstanding prospective new regulation in the sector or a jump in interest rates.
However, the panel said that the strong growth seen recently would moderate this year, with David Whittaker adding that the likes of last year’s gross BTL lending – which was up 32% - would not be ‘sustainable’ in light of a cooler consumer mortgage market. He predicted growth of 10-12%, which the majority of the audience agreed with.
On the topic of the products that lenders offer to BTL investors and whether they were suitable, Whittaker noted that there were 850 products available currently, compared to last year’s 600, and with two new lenders there is ‘plenty of choice’ for investors.
Whittaker raised the issue of HMO lending, saying:
“There is of course an underwriting risk. Out of the current 850 products on offer, 35 of them focus on HMOs.”
This ratio struck him as the right proportion of the market although he welcomed more choice.
John Heron suggested that there is a scarcity of specialist buy-to-let lenders with the credit expertise and experience to understand landlords’ more complex requirements and appreciate what development the market requires.
He said:
“HMOs are a good example as they need a particular approach to valuation and rather more thought to underwriting so I would not encourage every lender new to the market to offer buy-to-let products on HMOs.”
On the question of housing benefit, it was discussed that there is a perception that lending on properties with housing benefits is a higher risk. Fundamentally, the sector needs to provide fair opportunities for paying tenants, and lenders have a responsibility to help landlords facilitate letting in a socially responsible way.
For fixed rate products, Heron felt there are clear improvements being made with 85% of products on offer in recent months being fixed rate, however, there needs to be a solution to longer-term fix requirements.
