"The expansion of the private rented sector has led to huge changes in policy, financial support and how landlords are approaching this sector."
There has been a seismic shift in attitudes towards the more specialist mortgage markets in recent years. This has largely been driven by increased levels of professionalism shown by lenders operating across these sectors and in the delivery of responsible and accessible solutions which are better meeting the needs of the self-employed, those borrowers with more complex incomes and for a range of property professionals.
It's been a welcome and much-needed transition from some perceptions of old which have, understandably, been tough to budge. That’s not to say every proposition in the specialist market is perfect, it isn’t. Bad practice will always be evident in any business sector and the mortgage market is certainly no different. However, the role of specialist lenders will continue to grow as, hopefully, will their burgeoning reputations within the intermediary channel and among borrowers from both a product and service perspective.
Over the years, there has been some debate over whether the buy-to-let sector should fall under a more mainstream or specialist banner, such has been its rise in prominence. There is no concrete argument either way but what we do know is that the expansion of the private rented sector has led to huge changes in policy, financial support and how landlords are approaching this sector.
As such, it was interesting to read Landlord Leaders: A new environment for the private rented sector, a report from the OSB Group which, in the words of the report, conclusively shows the private rented sector evolving to a more tenant-centric and professional approach – one that will have positive long-term implications for UK society and the economy.
The report demonstrated how this environment is driving a shift to more professional landlords – those who own multiple properties (more than four) and derive their main income from letting them out. The majority of landlords (64%) agreed that the sector is moving towards professionalisation. Nearly a third (30%) said that this was long overdue and a good thing – with professional landlords themselves more likely to hold this opinion than their part-time counterparts (32% versus 24%). However, a quarter (25%) of respondents suggested that the professionalisation of the sector is a bad thing and will have many negative consequences, but this reduced to just 12% of professional landlords who are clearly far more in favour of the path they have chosen to tread.
When speaking to brokers, the figures were consistent with 73% agreeing the sector was professionalising and 30% saying this was a change for good. Just one in 10 (9%) felt that professionalisation of the sector would be negative while a significant proportion (23%) did not have an opinion.
As outlined in the report, for those professional landlords who are already one step ahead, there is clear opportunity. They are investing and upskilling to create better living environments for their tenants, confident that in doing so, they too will thrive. Yet for others, there is a risk of not keeping pace – through circumstances not of their own making – and this could result in significant shifts in property ownership and management in the coming decade.
With increased complexity from a regulatory, tax and now funding perspective, this increased move towards professionalisation is hardly surprising. Alongside these increased levels of professionalism is a greater reliance on the advice process, even amongst the most experienced landlords. Thankfully, more products and solutions are emerging in the early weeks of 2023 to meet these portfolio demands and, going back to my earlier point, specialist lenders are often best placed to support them on their BTL journey.
