In The Spotlight

In the Spotlight with Paul Fryers, Zephyr Homeloans

Rozi Jones
19th February 2021
Paul Fryers Zephyr new
"Landlords are looking strategically at their portfolios to maximise yields, adding to the increased activity in the buy-to-let mortgage market."

We spoke to Paul Fryers, managing director at Zephyr Homeloans, about why specialist lenders will play a bigger role in the mortgage industry's future and whether the stamp duty holiday has helped move the buy-to-let market.

FR: Do you think specialist lenders will play a bigger role in the future of the mortgage industry?

While there are still many landlords with one or two buy-to-let properties, it is the specialist area where we see the most growth at the moment.

Based on this trend, specialist lenders will likely play a bigger role in the mortgage industry's future. Since the market re-opened, we are already seeing an increasing number of professional landlords expanding their portfolios.

Many professional landlords are focused on traditional one-family homes. However, there is a rising interest in expanding to multiple occupations (HMO) and multi-unit block (MUB) properties. Both are areas that require specialist mortgages.

FR: What are some of the current buy-to-let mortgage trends you see today?

Landlords are looking strategically at their portfolios to maximise yields, adding to the increased activity in the buy-to-let mortgage market. We have also seen an increase in the amount of limited company structures purchasing properties

One of the biggest trends is the move towards specialist properties, notably HMOs and MUBs. This is unsurprising, as the yields are often higher, although landlords need to be experienced to make this work.

We see a definite shift from the cities as people seek rentals in more rural areas. Our sister company, The Deposit Protection Service, has reported that, over the past few months, rents have increased in many rural areas. Whilst, in contrast, rental costs fell sharply in some cities as more UK tenants looked to relocate from town to the countryside. Demand for properties with gardens and those with larger indoor space has also grown.

Rents have fallen for flats and risen for houses. This, in turn, is driving investors’ purchasing behaviour. Professional landlords who are continuing to expand their portfolios have sought out specialist buy-to-let properties as well as more standard properties.

FR: Has the stamp duty holiday helped move the buy-to-let market?

The stamp duty holiday has helped the whole market, as evidenced by the rush of people looking to buy. There was already pent up demand following the lockdown, and volumes have been very high for both buy-to-let and residential mortgages.

However, it seems that we are rapidly approaching a point where purchases will not complete in time to take advantage of the stamp duty holiday. Market stakeholders are already facing delays. Lenders and brokers will need to work together to advise clients and manage expectations to avoid any surprises as the 31 March deadline looms.

FR: How will a second wave of the pandemic affect the buy-to-let market?

There is no way to predict what will happen, but there seems to be a greater demand in the private rental market than ever. There are several reasons for this:
• People continue to seek properties with more room or outside spaces
• Higher home prices, lower earnings and tight credit rules mean many Millennials continue to rent rather than buy
• The shift towards lower loan-to-value lending means that it is harder than ever for first-time buyers to raise a deposit
• Greater uncertainty in the jobs market likely means an increased demand for renting.

Councils and housing associations alone cannot meet the demand for affordable, quality housing. Private landlords continue to play a significant part in addressing housing needs and solutions.

FR: What are some of the next key areas of focus for Zephyr Homeloans?

We are particularly focused on supporting the professional landlord and committed to growing our buy-to-let business by building strong partnerships with the intermediary market. Limited company structures form a natural route for landlords to expand and grow their property portfolios, and our products remain focused on meeting this need.

We also see an opportunity to use data from the Deposit Protection Service, which is also part of the Computershare Group, to help guide landlords to areas of the buy-to-let market where returns are likely to be higher.

We also provide a quality service to brokers and their customers. Currently, we help our clients with the many challenges created by the pandemic and the buoyant housing market.

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