BTL lending predicted to fall

BTL lending predicted to fall
By mid-2018 15% of all vanilla buy-to-let business will have moved into the specialist, portfolio and complex sectors where the procuration fees are larger

According to David Whittaker of Mortgages for Business, the amount of gross buy-to-let mortgage lending is likely to fall over this year and next, however the share of lending through limited companies should increase.

Mr Whittaker was speaking at yesterday’s FSE Manchester event and suggested that 2017 would see a slight reduction in the £40bn of buy-to-let lending completed in 2016, and that this would fall further in 2018. However, while he predicted 8/9% of this lending would be for limited company buy-to-let this year, he anticipates this rising to 20% through 2018.

Whittaker outlined data from two lenders – Keystone and Paragon – which both showed an increase in limited company buy-to-let purchase applications. He said Keystone’s figures revealed that in Q4 2015 one in four were through a limited company, while this figure had increase to three in four by Q4 2016. Data from Paragon suggested that more than half of its purchase applications were now through limited companies.

Whittaker urged advisers, and their clients, to be prepared for the second part of the PRA buy-to-let lending underwriting changes, which lenders have to introduce by the start of October. “We will all have to be prepared for much more paperwork,” said Whittaker. “It will feel like a Paragon mortgage application on speed.”

He was also concerned that lenders do not hold back in terms of their policies and processes for the underwriting changes. “Lenders have yet to announce on this,” he said, “But a good time to tell us is now so that we can prepare for it. We, and lenders, will be looking at a level of documentation we’ve never looked at before. Will there be a ‘common standard’ across all lenders? It’s unlikely, given they’ve never done this before.”

Finally, Whittaker also called for an industry debate about the appropriate level of reward for advisers given the increase in the amount of work required by buy-to-let cases.

He predicted that by mid-2018 15% of all vanilla buy-to-let business will have moved into the specialist, portfolio and complex sectors where the procuration fees are larger. “But, this is still not enough money for the greater work required,” he said. “A seismic change is going on, and we need a proper debate on this. If they [the lenders] pay us properly, they’ll get the work as they want it.”

Whittaker did however predict that procuration fees for buy-to-let business would be going up over the next 12 months. “At Keystone we will be paying extra and we will expect others to follow suit,” he said.

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

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Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

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Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

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Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

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Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

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Samantha Goodman
Samantha Goodman 11 Aug 2017

It depends on the people, some older adults decide to make a long-distance move in order to live closer to their children or settle in a place with a lower cost of living.

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brandonlee10 24 Jul 2017

The financial ramifications of the triggering of Article 50, the starting gun for Britain's departure from the EU, are far from clear. Buyers will be most cautious in London, given that buying a home in...

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IrisJ. 19 Jul 2017

Great advice, but may I also add that when buying an already built home, make sure you do all of the proper inspections. Most importantly pest inspection because people tend to get surprised when they

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IrisJ. 17 Jul 2017

The third point is, in my opinion, the most important one. People have become too inconsiderate and careless when it comes to rented properties. If a landlord wants to protect their property, regular visits...

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cornishalan 10 Jul 2017

Added to the cost of purchasing these village properties are the above average maintenance costs. Particularly where the property is a listed building or requires specialist building skills such as thatching...

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