What does a second lockdown and uncertain winter mean for Buy-to-Let brokers?
by Sophie Mitchell-Charman
As lockdown began at the start of November, brokers, lenders and property investors could at least see some comfort that the housing market – which had been stopped in its tracks in March – would be able to continue with valuers not affected by the new restrictions.
While this meant business could continue as (new) normal, the mass closures of businesses, the return of furlough scheme and an extension to mortgage holidays and eviction bans does bring uncertainty back to a market which had just regained some over a record-breaking summer for Buy-to-Let deals.
What this means for brokers and their clients is they need to be able to rely on lenders who learned the right lessons from the first lockdown about keeping business moving, adapting to new restrictions and above all being open and honest with their customers.
Keeping business moving
Not losing momentum built over a record summer of activity and ahead of the government’s stamp duty freeze ending will be at the forefront of the minds of all landlords looking to grow their portfolios.
Supporting brokers and borrowers to keep their cases moving and portfolios growing will be key for those still making up for lost time. We saw this in the first lockdown where we supported brokers and their clients by queuing up cases in anticipation for the return of valuers.
While the valuation issue isn’t here this time around, there’s still the requirement for landlords to be able to move quickly in the face of an uncertain market and the stamp duty deadline, and have lenders support them to do that.
It was with this in mind that we introduced appetite statements over the summer, giving the clients we’ve worked with a pre-agreed financing offer to go out and find their next Buy-to-Let.
This provided confidence and assurance from knowing the funding is in place but can also reduce the time to get the deal done after the right property is found
Another key thing for borrowers to consider is how lenders have reacted to the record demand.
Lockdown in the earlier part of 2020 meant a lot of business built up and then came out as a flood over the summer months.
After getting started on that business, brokers and borrowers are mindful about lender ability to deliver on the backlog of cases they’ve now been issued with before the stamp duty holiday ends next spring.This is where investment in a broad legal panel can help expedite cases, which is why we worked to expand ours with the recent addition of Birketts, to help meet the record demand our brokers were requesting of us.
To truly meet client needs in this environment, flexibility and opportunity around every part of the Buy-to-Let process is necessary from lenders.
Despite severe lockdowns bookending the year, lenders and their clients have been operating under restrictions throughout most of 2020, and by now should have introduced measures to help safeguard against Covid-19 with appropriate distancing measures and a reduction in face-to-face meetings and paperwork.
As a technology-enabled lending platform that seeks to reduce the need for physical documentation wherever possible, we were well prepared for this going into lockdown, and have kept on the additional changes we made to support digital signatures, searches and ID verification.
An online broker portal, supported with Open Banking which digitises the underwriting process, helps meet the goals of all brokers and clients in this environment – to move quickly and safely.
Possibly the most important thing for property professionals in this environment is open, honest conversations with their BDMs and lenders over what is deliverable.
As the landscape changed earlier in the year lenders were making frequent changes to rates, incentives and criteria as they assessed a turbulent market. At that time the pressure point was keeping up with what was available, now it is trusting a lender to keep up with and deliver on demand and do what we all want to do – deliver the best deal for your clients.
Where transparency starts trust will follow, and that’s why it’s necessary to have access to BDMs, underwriters and case managers to track your deal and discuss openly any issues that may arise, and have visibility of an organisation’s service levels when you’re choosing which lender is right for your client.
After a year of uncertainty and a winter facing some more, brokers and borrowers should be assured by their lenders that they have taken steps to keep their cases moving and businesses growing in the face of any more obstacles.