Demand across the rental market remains strong.

The purchase market is currently buzzing. In a throw-back to some of the heady days of old, we’re hearing stories of bidding wars and properties being snapped up before they even come onto the market. It’s clear that whilst the raising of the stamp duty threshold has certainly worked to accelerate activity across the housing market, changes in people’s working and financial circumstances are affecting their decision-making process. Meaning that the value attached to good, professional advice has never been higher.

Demand across the rental market also remains strong as many potential homebuyers from the pre-lockdown period are currently being forced into renting for longer due to lingering economic and workplace uncertainty. And some demands over the size, quality and location of these rental properties are also shifting.

Here at Impact Specialist Finance, we’re seeing a swell of activity within the buy-to-let (BTL) marketplace as a wide range of investors, developers and landlords are looking to take advantage of the stamp duty tax break. This was reflected in research from cherryplc.co.uk which outlined that more than half of brokers have seen an increase in buy-to-let purchase business in recent weeks. 57% of brokers said they had seen a rise in purchase business, compared to just under 12% who reported an increase in demand for capital raising on a remortgage.

In addition, more than 30% have seen an increase in individual purchases and nearly 27% have seen an increase in limited company purchases. There has also been an increase in the number of clients with more specialist BTL requirements, with nearly 8% of brokers seeing a rise in demand for houses of multiple occupancy (HMOs) and almost 4% seeing more enquiries for lending on both multi-unit blocks of flats and holiday lets. This uplift within the intermediary market is reflective of increased momentum across the board as the more professional end of the landlord spectrum are actively looking to add to their portfolios and acting swiftly on the opportunities that are currently presenting themselves.

Confidence around the BTL proposition is growing as more and more lenders are re-entering the market after a temporary break due to lockdown restrictions and competition is swiftly rising, especially amongst specialist lenders and with the option of 85% loan to value now being back on the table.

Many challenges remain but the importance attached to private rented sector is all too evident. And the sector - alongside a robust advice process – will continue to evolve to meet this growing demand, not to mention ever-changing landlord and tenant needs.

Rates being pulled quickly, have your paperwork ready!

The current climates continue to affect the mortgage market in many ways.  We’ve seen lenders pull rates quickly, decreasing rates one day and increasing them the next.  We’ve seen some lenders remove the higher LTVs (Loan to values) 95%, some removing 90% and others removing 85%.  We have seen some lenders launch limited edition products and others have not re-entered the market at all!  All signs of the times and of the fast-moving pace of the money markets. 

The only certainty seems to be uncertainty and where lenders may have previously considered clients on furlough, or those who have taken bounce back loans within their businesses, this may have changed as lenders look to ensure clients can afford the mortgage for the next six months and onwards.  Some require a letter from the client to confirm this whereas others may require to view bank statements to prove they have the funding. 

Some lenders may have previously taken all of a client’s bonus or commission when working out affordability, but more recently have reduced this to 50% of received monies.  We’ve seen one lender limit the maximum term of the mortgage to 25 years for first time buyers and change their acceptance on where deposits come from, for example - gifted deposits.  

With changes happening quickly, it is vital you get all the documentation required to the lender as quickly as possible to secure your rate and that product availability.  Especially as some lenders are receiving pre-covid volumes of business, but only with 50-70% of normal staffing levels.  This means that some lenders can be weeks behind and if you only provide certain items, you may find that you go to the back of the queue when the outstanding items required are submitted, which extends the delays. 

Most lenders will no longer prioritise the valuation of the security property.  They will assess the whole mortgage application and confirm agreement to proceed before instructing the valuation.  Be aware of this as Estate Agents need the valuation instructed asap.  Depending on the lender you go with, this could take a few weeks.

Finally, expect this to continue for some time.  Not just because of the ongoing pandemic, but also with the stamp duty temporary changes taking effect, a lot of people are trying to move before the end of March deadline.  Good for the property market, but who knows what may happen with processing, criteria and resulting inevitable delays over the coming weeks and months.