View from BDMs: what they are seeing in the Limited Company and long-term Buy-to-Let markets
See our latest Buy-to-Let rates and offers.
This month the Buy-to-Let team is looking in-depth at the Limited Company market, as well as the appetite and use of long-term rates after we launched our first 10-year product range, to complement our 5- and 7-year ranges.
As landlords try to manage what external market pressures could mean for their portfolios, we are seeing increased consolidation within simpler management structures and them turning to the added security of long-term loans.
Our BDMs Peter and Shane have written about what they are seeing in their regions.
Peter Olasoji – London and Southern England
Over the last quarter I’ve seen our 7-year fixed rate become one of the most popular among the brokers I work with. Competitive pricing – helped by lower rates for properties with improved EPC ratings – has encouraged brokers and their borrowers to look long term.
These long-term products have come at the right time with market conditions upset by uncertainty due to Brexit, Covid and Ukraine, which are contributing to cost of living challenges which could last for a long time.
We are seeing opportunity within this, the close attention to energy and heating prices has made all property owners more wary of saving money, and this is an important consideration for landlords with new EPC requirements coming in soon and trying to protect their rental income by making things better for their tenants.
I’ve seen clients using our bridging finance to improve the EPC rating of their properties so they can take advantage of our lower rate EPiC Range, which when combined with the longer-term loans offers them cheaper rates for longer, as well as passing on benefits to their tenants.
The technology making the LTD Company Buy-to-Lets simpler
Limited companies in the South
I’m seeing a lot of demand from Limited Companies at the moment as landlords are attracted to our ICR at 125% @ 5% or pay rate approach.
At the incorporation stage, a lack of simplicity from lenders is the major issue for brokers, and the demands of landlords here are the same as those everywhere: they want a simple process from application to underwriting.
This becomes more acute with portfolio applications, where keying in multiple details can become cumbersome and then repeating yourself to underwriters can build frustration. This is where we’re finding our tech making an important difference, with the copying details in the portal and Open Banking providing real time savers.
Shane Wallace – East England
There is a demand for longer-term Buy-to-Let fixed rates across the UK, with interest rate concerns coupled with various environmental and market factors clients are looking for more stability in this unprecedented time.
This desire is also driven by record property prices, which allow clients to leverage the maximum available on long-term pay-rate products such as our 7- and 10-year fixed options.
Clients and brokers alike are unsure where the peak of the market sits nor what lies ahead for the UK economy and housing market and if a correction is imminent.
Impacted by world events including Brexit, Covid and Ukraine along with BOE rate increases this year has created more uncertainty in the market, and has therefore driven more to consider longer-term mortgages.
Case studies: Individual landlord and limited company remortgages
Similar to the South of England, new EPC regulations have pushed more clients to purchase properties with good EPC ratings or improve the properties in their portfolio with either light refurbs or bridging finance.
As we offer reduced rates for A-C EPC rated properties and an option of Bridge-to-Let, allowing the client to bridge, enhance the property and EPC rating then exit on our BTL. This journey has become increasingly popular.
EPC enhancements benefit the tenant in lower household bills and the landlord through reduced mortgage costs, we have seen clients enhance properties which are predominantly new purchases and re mortgage applications.
Those landlords who have properties tied in longer term fixed rates are not currently offered any financial support or incentives for property enhancements from their current lenders.
This presents an opportunity for lenders who have these properties on their books and a risk to landlords if not addressed when the new rules come into effect.
Limited Companies
I’m seeing a lot more limited company applications at the moment, as our simpler process and incentives around limited company corporations continues to appeal to landlords at the incorporation stage.
After years of tax changes, limited company structures have become more appealing and the simplicity of making it happen is the main barrier to entry for individual landlords.
These are not usually complex nor difficult transactions although perceived as being so. Brokers and clients want a lender who firstly understands the various incorporations, arrangements and set ups and who follow the path of least resistance to achieve the client’s aim.