"Smaller landlords will need specialist help from advisers and lenders and providing a streamlined and professional service for those clients will be important in 2017."
FR: The Mortgage Partnership is celebrating its 20th birthday this year – what have been the most fundamental changes in the finance sector in this time?
Where do I begin? One of the most fundamental areas has got to be regulation. The impact has been considerable but has been embraced by the market and the industry is definitely stronger and more customer focussed as a result. Technology and the internet have revolutionised processing of mortgages. When I started, everything was paper based and I still remember how advanced it all seemed when we could fax documents to lenders! The 2007/8 credit crunch probably has had the greatest overall impact. It decimated adviser numbers and really made those of us who survived think very carefully about the service they provide and how they deliver it. One of the longer term consequences of the credit crunch has seen the rise of the specialist lending market, providing access to finance that many customers require but cannot get on the High Street.
FR: How will buy-to-let changes affect the sector for the rest of 2017?
I think it is fair to say that the changes in Stamp Duty have been absorbed and while the surcharge did initially put off many existing and potential landlords, the tapering of tax relief which came into force in April, will be more significant longer term. The cumulative effects on yields will see more landlords assessing their portfolios to see which ones become potential loss makers.
After September, which sees the implementation of more stringent affordability testing on landlords with 4 properties or more, and assuming that the Treasury makes no more demands, recent new activity suggests that the BTL sector will again show signs of growth. BTL will see more professional landlords as it will no longer be a guaranteed moneymaker for landlords looking for an easy investment. Lenders will naturally concentrate on where they see the greatest opportunity for growth, which will definitely include professional landlords. However, smaller landlords will also need specialist help from advisers and lenders and providing a streamlined and professional service for those clients will be important in 2017.
FR: What advice would you give to brokers who are new to the specialist lending market?
Make use of distributor packagers like The Mortgage Partnership who will do the heavy lifting in terms of research and find options that would take the average brokers far too long to find. Packagers are fantastic resources, if you can find the right one to work with, and will save you time and money as well as keeping you abreast of the right customer outcomes.
FR: How can equity release be better integrated into retirement planning, and what benefits would this bring?
Lifetime mortgages are going to be hugely important going forward. With the decline in pension provision and interest only mortgages looking to mature, more people are going to need to access the equity they have in their properties. Retirement planning usually takes place earlier in a career and regularly revisited. Lifetime mortgages should be part of the arsenal of every adviser who has clients facing retirement with a depleted pension pot or a mortgage overhang. It might not be the right answer for everyone, but provided the advice is consistent, we are going to see a growing market for this product and every adviser should be making clients aware of their existence. For intermediaries, it makes sense to make use of the services of specialists like The Mortgage Partnership and refer clients for the right advice if they do not want to take on the extra qualification and subsequent research.
FR: If you could see one headline about financial services in 2017, what would it be?
Apart from my fantasy of seeing the return of MIRAS and LAPR (For those too young to have been around, check Google!), I would love to see the regulator(s) be more proactive in telling the public what a great deal they get from the whole of market service they receive from the intermediary community.
