"There will continue to be a housing issue as there are still too many people and not enough houses. It is basic supply and demand and I don’t see it changing any time soon."
FR: How well prepared is the industry for the PRA changes to portfolio buy-to-let, and how will the new rules affect the market?
The new rules will definitely make it more complicated for landlords with four or more properties and we will inevitably see some landlords divest a number of properties.
Most lenders have set out their stalls, but they have had very little guidance from the PRA, so the rules are being interpreted quite differently by different lenders. Because lenders do not yet know whether they have interpreted the rules correctly, it is a bit like the MMR where lenders have gone in harder to start off with, then may ease back later.
Brokers appear to be aware of the changes but most have not yet got to grips with the details and what they need to do to help their clients. When it comes to helping landlords put together a business plan or a cash flow analysis there is still quite a lot of learning to be done.
FR: Do you foresee the supply and demand issue getting worse? What more can be done to ensure people continue to have access to the mortgage market?
There will continue to be a housing issue as there are still too many people and not enough houses. It is basic supply and demand and I don’t see it changing any time soon.
It has been exacerbated by the growth of the single person household over the past twenty years and the fact that many homes now have far fewer people living in them. However, some landlords are helping address this issue by adapting houses into self-contained units with shared amenities that can be rented out to single people. It works for the landlord as any house alterations can be offset against tax, they then earn more money than letting to a single family. It also provides housing for many more people.
I expect lenders to continue to innovate to enable this sort of scheme. Lenders have money they need to lend and will alter their criteria to make sure they hit their targets, with some lenders, like the Family Building Society innovating to accept funds from people across the family to help younger members onto the housing ladder
FR: Do you think that the specialist lending market will continue to grow?
As high street lenders stick to the mainstream, the specialist side will continue to innovate and bridge the gap, to help those borrowers who have more complex personal circumstances and do not fit the neat boxes required to get a ‘vanilla’ mortgage.
These lenders will be happy to push the boundaries, as their ability to underwrite on a more individual basis means that they can take a more qualified risk.
FR: How will Brexit and a low Base Rate continue to affect financial services in the coming months?
We won’t feel the real impact of Brexit for some time. Much of the doom and gloom predicted has not materialised, but there will always be winners and losers and both the UK and Europe may have to compromise on some fundamental issues.
Where the housing market is concerned however, the basic supply and demand issues will remain the same and will need to be satisfied. The government can’t afford the housing market to collapse and so while the Bank of England may be independent, it will be in their interests to ensure that the housing market is protected.
FR: What’s one piece of advice you would give to intermediaries?
Invest the time to build your knowledge, because there are many opportunities out there and unless you have the knowledge you won’t be able to capitalise on them.
FR: If you could see one headline about the mortgage market in 2017, what would it be?
"Connect celebrates its 20th birthday in style, cementing its place as the ‘go to’ packager and network for expertise and knowledge on buy-to-let, commercial and specialist loans".
