Underwriting’s importance in the current Buy-to-Let landscape

By Raheel Butt, Head of Buy-to-Let Underwriting at LendInvest

The Buy-to-Let market has – rightly – been dominated by the volatility in rates over the past six months. 

While some stability has returned to the market in the last couple of months, the underlying uncertainty that drove increasing rates at the end of 2022, remains and will stay in place, we expect, throughout this year and into 2024 before it settles. 

However, we’re not expecting a huge slowdown in Buy-to-Let applications; remortgage business will remain high, landlords on tracker mortgages will look to keep options open and while some investors will scale back ambitions, a fall in house prices could create a buyer’s market. 

So now the conversation needs to move on, not necessarily to wait and see where the market normalises at, but on how we support landlords through the next year. 

Lenders which provide clarity, simplicity and reliability will be those who stand out and earn the loyalty of their customers, for when they are approaching deals until rates start to come down.

Offering simplicity

After a year of trying to understand swap rates, making Buy-to-Lets simpler will be a welcome relief, particularly for landlords with larger portfolios looking to consolidate. 

Our approach to these types of  transactions mainly focusses on a common sense approach. 

These transactions make great sense for the client as a more tax efficient way at owning the properties in their portfolio, while ensuring the transaction follows the right procedures.

We deal with these types of transactions every day and always look for the best way at incorporating the clients’ assets in a way that works for them and ourselves, by exploring all possibilities when conducting these transactions.

Our flexible approach to these is what sets us apart from a number of lenders and allows us to come to a resolution that suits everyone involved.

Technology + Experts = Reliability

As the current market is moving quickly, we’ve increasingly seen the value of our technology increasing the speed at which we can turn applications around, before the market has moved on. 

What shouldn’t get lost in this though is the role of the expertise, especially around working through the criteria and particulars of the deal to make sure it is the right one for the landlord. 

This is one of my key objectives, bringing the underwriter into the room, building relationships, understanding the deals from the outset, giving guidance without giving advice, and looking at ways we could make a deal work in line with our lending policy/criteria.

In addition, ensuring that policy and criteria is adhered to at all times.

We have examples of this working recently, where a client visited our office in London and requested that they deal with a particular underwriter, although this may not always be possible we will endeavour to do our best to accommodate where we can.

The road ahead

Resilience is a theme that has underpinned the UK property market – and Buy-to-Let – over the past decade and it will continue to be displayed over the next year.

People need high quality homes, and with investments in build to let growing there will be plenty of opportunity for landlords. Our job, as lenders and underwriters, is to support property investors to calmly get past the noise around rates and focus on the long-term opportunities.