Many providers will not lend to ‘grandlords’. But with paid-off mortgages and good pensions, they’re a safer bet than most.

The latest Council of Mortgage Lenders figures, though pleasing, were not surprising. The figures show that in Q1, buy-to-let lending hit £4.2bn, up by £500m on the same period in the previous year. I fully expect lending figures for Q2 to be even higher.

The buy-to-let business had a record month in April, and May is shaping up to be a good month too. If other brokers and lenders achieve the same success we could be looking at lending figures of £17.5bn to £18bn for the year.

I found a recent report in one of the broadsheets surrounding so-called ‘grandlords’ to be an interesting read. The piece claimed the number of older landlords has increased by 33 per cent since 2009. What intrigued me about this was not the fact that the older generation are seeking ways to boost their retirement income, but that they are finding lenders allowing them to do so.

Most lenders have strict criteria on the age of their borrowers. The Mortgage Works will lend up to the age of 90 but for most others the maximum age for borrowers is 75.

In mainstream mortgage lending it is clear why a lender would set an age limit on its mortgages. Residential mortgage repayments that were perfectly affordable when in employment can suddenly become very difficult to maintain when the borrower retires and is left without an income.

However, in the buy-to-let sector it is different. The borrower does not repay the mortgage with their income. Instead, tenants who occupy the property pay rent that covers the mortgage payments. The age of the borrower is, therefore, irrelevant.

Yes, there is an argument that should the borrower struggle to find tenants for any period of time and the property is left empty a retiree may struggle to cover the repayments. But many older borrowers have pension pots that are more than adequate.

Furthermore, a borrower who is well below the age of retirement would more than likely still struggle to cover the repayments on their buy-to-let mortgage if they cannot find tenants, especially if their income is being used to make the repayments on their own mortgage.

Indeed, in most cases the older borrowers would have cleared their own mortgages by the time they retire and as such any pension income could be used to fill the gap in their buy-to-let mortgage until tenants can be found.

It is also worth noting that surveyors are asked to assess the likely rental demand of a property and consider void periods. This is a big driver in an underwriting decision and why many buy-to-let lenders focus on the quality of the property once basic criteria on the individual borrowing has been met.

As the housing market and the demographics of the country continue to change, lenders should be constantly assessing their criteria to make sure they still make sense.

This month Hinckley & Rugby is continuing to impress, offering an incredibly low two-year discount up to 60 per cent LTV. It also has a flat arrangement fee.

BM Solutions is also high on the best-buy tables with its two-year fixed rates with flat arrangement fees.

Spring is in the air and the latest buy-to-let figures on valuations and remortgages show that the market is blossoming this year.

After a bitterly cold and crisp winter, the spring weather seems to have finally arrived. For me, the spring season always represents a positive start and

I believe latest figures are giving us that boost we have been seeking.

In my last column, I noted that falling buy-to-let rates indicated now was a great time for investors to remortgage and, as such, presented an excellent opportunity for brokers to win back remortgage business. Recent figures released by Mortgages for Business have backed this up.

The figures, revealed in Mortgages for Business’ buy-to-let index, show remortgaging business has soared by 26 per cent in the first three months of 2013. In the first quarter, 69 per cent of all residential buy-to-let transactions were remortgages, up from 43 per cent in the fourth quarter of 2012.

The steady increase in valuations in the buy-to-let residential sector is also continuing, according to figures from Connells Survey & Valuation, which show buy-to-let valuations increased 45 per cent month on month, making March 2013 activity levels 19 per cent higher than March 2012.

Meanwhile, house prices have hit a record high for this time of year. According to Rightmove, the average asking price is now £244,706, having risen by £15,717 since the start of the year.

This increased activity and upward trend figures is encouraging to see. It is always good to go into a new season with a boost in business and the obvious opportunities available for brokers could certainly provide that.

Product wise, there is plenty of good deals on offer for those looking to remortgage.

Hinckley & Rugby leads the way with its show-stopping two-year discount at 60 per cent LTV. It has a flat arrangement fee, free valuation and no ERCs.

Meanwhile, Accord Buy-to-let continues to offer competitive rates in an attempt to be a leading buy-to-let lender, with its two-year loan fixed at 75 per cent LTV. It has a low percentage arrangement fee and comes with £250 cashback on completion.

Elsewhere, it was interesting but not surprising to read that the number of tenants in severe arrears rose by 4.8 per cent in the first quarter of 2013. This counteracts the improvements made in 2012 which saw, at the close of the year, severe arrears down by 14.5 per cent. Tenants are classed as being in severe arrears when they are two months behind in rent.

Following Christmas, money is always tight and this year, with fuel bills continuing to rise and other household bills showing no sign of falling, it is not surprising that tenants are struggling.

While these times are hard for tenants, they also cause challenges for landlords. Thankfully, the falling buy-to-let rates resulting from the Funding for Lending scheme are giving landlords some leeway and helping them to deal with arrears.

However, there are ways landlords can help protect themselves when letting a property, including ensuring they get previous landlord and current employer references, checking bank statements for proof of liquidity and taking out rent guarantee insurance.

The buy-to-let market is buoyant as rates spiral downwards and brokers have an opportunity to win back remortgage business.

With buy-to-let rates on a downward spiral, investors have a greater incentive to expand and refinance their portfolios to more cost effective rates.

This is increasing business activity and keeping the buy-to-let market buoyant.

Since the credit crunch, investors reverting to 1.75 per cent over bank base rate have had little incentive to remortgage their properties.

However, investors who took out new business in the last two or three years face higher reversionary rates at bank base rate + 4.5 per cent, and a lenders’ SVR often in excess of 5 per cent.

This has made remortgaging a more attractive option for these investors, and provides brokers the opportunity to win back re-mortgage business.

Brokers can demonstrate that even after associated fees are factored in moving to a lower rate will reduce monthly payments and save on total costs over a given period.

Previously, re-mortgage business was only economical for landlords looking to release equity for further investment.

Hinckley and Rugby Building Society last week released a ground breaking buy-to-let deal, being the lowest on the sourcing systems and the most competitive to hit the market in recent times.

In addition to a market leading rate it comes with a free valuation, no early repayment charges and a flat arrangement free.

Previously, great headline rates were accompanied with high percentage fees, driving up the overall cost.

This rate pushes the boundaries on this notion.

As lenders hunt for more business, the bigger lenders are hesitant to engage in a rate war that will reduce margins.

Instead in recent weeks, what we have seen is lenders loosening their criteria to attract new business.

After some initial mixed messages both BM Solutions and The Mortgage Works both confirmed that they would lend on properties which housed department for social security tenants.

This is an area which historically lenders have shied away from due to the perception of lower quality tenants, and difficulties in getting possession in the event of arrears.

Unlike in the past, BM Solutions will also lend on properties intended to house students.

This relaxation in policy is very positive news.

Students must be on the same assured shorthold tenancy agreement and a maximum of five students is allowed.

This is an interesting development as existing lenders for student properties cap the number of students at four.

This development potentially opens up a segment of the market that would usually have sought funding from lenders with a House of Multiple Occupation range. HMOs still remain outside BM Solutions lending policy.

Finding good, qualified consultants is a constant challenge and we need to better understand their concerns to retain this pool of talent.

January was a record month for us and as I write this article we currently have eight new trainee consultants on our induction programme, our highest intake of staff since the onset of the credit crunch.

When we sourced for new recruits, we advertised for both experienced and trainee consultants. For the trainee position we received over one hundred applications, compared with the experienced position where we received only two.

This disparity typifies the current state of our Industry where sourcing good qualified consultants is a constant challenge. This experience shows that despite the adverse publicity the market has received in recent years, there is no shortage of candidates wanting to enter the industry. However, it also shows that the industry needs to better understand the concerns of experienced consultants to retain this valuable pool of talent in the industry.

In the last three to five years many mortgage consultants have left the Industry making the recruitment and development of new talent a priority.

In our recruitment procedure we look for individuals who have the hunger to learn and the desire to succeed. Product and industry knowledge can be taught, CeMAP can be studied for and exams taken. However certain interpersonal skills are ingrained in a person’s DNA, they either have it or they don’t. These soft skills are far harder to teach. Personally I like candidates with a strong sporty background as they often bring with them transferable skills such as teamwork, leadership and initiative.

In the past we have interviewed experienced candidates who initially showed promise, but after further investigation reveal themselves to be tired and disillusioned with the industry. Many have worked tirelessly over the last few years with little return, sapping their energy and enthusiasm and so we look to new blood to swell our ranks.

The benefit of recruiting trainee consultants is that you can mould them into the ethos of the company. They have no preconceived ideas and the current climate of tight controls and tough underwriting is the norm. The downside is the extra investment in training, something which not all brokers have the time or money to do. However I believe that short term pain will ensure long term gains.

Looking at the market this week, Investec has launched into the mortgage market targeting qualified professionals and business professionals for larger loans. This type of client often has complex and sophisticated circumstances. Investec not only are unfazed by this but indeed thrive on it.

They will also consider foreign nationals and returning ex-pats, an area which is currently underserved. Their minimum income requirement is one of the highest in the Industry. However given the type of client they are looking to attract this does not seem unreasonable.

Precise Mortgages has launched some exclusive products for properties in the south of England, first time landlords are accepted and there is no minimum income required. This in addition to the refund of the valuation and attractive rates at 75 per cent LTV makes it an attractive proposition.

Despite the snow, the year has started strongly as lenders jostle for business but more snow could hit profits if offices are forced to close

As I write this article, it is snowing heavily, and our offices have had to close early.

While snow makes for a pretty postcard and is great for sledging with my young boys, its impact on small businesses working tirelessly to maintain profitability in a challenging economic environment is huge.

A few days of not writing business can mean the difference between a positive or negative month.

My advice to firms is to utilise technology, for example, tools such as logmein.com which allows you to remote control your PC over the web or mobile from anywhere in the world.

The service is free and allows you to maintain some form of productivity should adverse weather conditions force your office to close.

But on to current state of the buy-to-let market and 2013 has started strongly with lenders jostling for position.

Most have targets to increase their market share in a buy-to-let market expected to stay strong and up on 2012 at around £17bn.

The Mortgage Works is now targeting properties in the south with some very attractive products with low rates and low flat fees, making it ideal for low geared high value properties in the London.

This is a change from their previous model of low rates with percentage fees.

BM Solutions has announced that it is looking to ramp up its buy-to-let lending as a proportion of total lending from 17 per cent to 21 per cent. This is a significant move for one of the largest players in the market.

It will be interesting to see if the new business will be generated by sharper rates or enhanced criteria.

BM’s service and quick processing still separates it from the competition.

Godiva is the lender that leads the pack behind the two big guns.

It has made significant inroads into the buy-to-let market over the last few years and 2013 promises to be no different.

It has a product with no arrangement fee and a free valuation at 65 per cent LTV and the rate still comes in under 4 per cent.

Platform has been quiet on the buy-to-let front in second half of 2012 and while it looks to remain as Platform or rebrand to Co-operative it has introduced some interesting rates at 60 per cent LTV and arrangement fee of £2450 with free valuation and free legal.

NatWest has good tracker products at 60 per cent LTV with £2495 arrangement fee.

If your income is £50,000 or more you will qualify for the lower rental calculation of 100 per cent at 7 per cent as oppose to 125 per cent of 7 per cent which can make a big difference in determining borrowing levels.

Hinckley & Rugby has launched two exclusive discounted products, and both products have free valuation to reduce upfront costs and have the flexibility of having no early repayment charges to allow you to react to any unforeseen changes in the market.

Rental calculation is also at pay rate which means most properties should stack up.

2013 will be a year of further growth for buy-to-let. I expect to see a few old faces return to lending and a few new faces consolidate their position in the marketplace.

The Buy to Let Business Mortgage Club has launched two new  exclusive buy to let mortgage products today!

The exclusives are market leading at low and high LTVs.  At 60% LTV 2.89% 2 year discounted rate; with a £2,249 arrangement fee and 75% LTV 3.29% with a £1,999 arrangement fee.  Both products come with a free valuation, no early repayment charges and rental calculation of 135% @ pay rate.

These are great products at very low rates and flat arrangement fees. Given the free valuation, upfront costs for the client are kept to a minimum.  We have seen a strong start to 2013 with lenders jostling for market position and we expect this trend to continue. These new exclusives demonstrate our blossoming strategic partnership with this ambitious lender.

All intermediaries wishing to register with The Buy to Let Business Mortgage Club can do so by either visiting www.thebuytoletbusiness.com/mortgage-club or by calling 01276 601041

Christmas is fast approaching and if you’re like me you’ll be wondering where the year has gone, and what new exciting gifts you can buy your loved ones.

If lenders are feeling festive and want to give intermediaries a present for 2013, here is our Christmas wish list.

1. No shifting of goalposts

Lenders sometimes add to a shopping list after an applicant’s documentation has been provided. This shifting of goal posts frustrates mortgage brokers. While it is expected that documentation can generate further questions or requirements some lenders seem to add unrelated further requirements during the late stages of an application, or often a completely different underwriter will review the case and ask for a different shopping list.

To minimise frustrations increased clarity of the requirements could be provided upfront. This will help brokers to effectively manage the expectations of their clients and their mortgage journey, and minimize time wastage.

2. More innovation

The number of products and the arrival of new lenders in the buy to let market space has been one of the big positives in 2012.  However many of the lenders and products are looking at the same safe vanilla area.  The current market will provide 75% for a three bed semi detached property in leafy Surrey.  The property will be rented to a professional family and the landlord will have a few buy to lets, an unblemished credit history and a strong income from a white collar job.

It would be nice to see higher LTVs, more products for the HMO/student market, light refurbishment products, limited company product range and other niche areas that are currently underserved.   

3. Common sense underwriting

Current controls and processes should ensure that the mortgage industry doesn’t return to the early days of irresponsible lending.  Underwriters should continue their efforts towards a common sense approach of buy-to let lending, with a greater understanding of the mechanics and drivers of the buy-to-let investment.  Deals which are refused because the “computer says no”, can be frustrating.  This is still a people’s business and whilst technology can perform many of the tasks, a commercial mind with a human touch still needs to be the ultimate decision-maker.

4. Flat fee products

When competition in the market place was weak and clients had fewer options lenders could charge large percentage fees.  However with more choice available for landlords now, we have seen a fall in the number of % arrangement fee products.  We encourage lenders continue this trend into 2013. 

5. Cater for large landlords

Recent research by BDRC Continental shows that arrears levels are lower among larger landlords who run their portfolio as a business.  Yet despite these impressive results, this class of landlords continues to be neglected by lenders. Lenders need to differentiate between large landlords who have built, low geared and high yielding profitable portfolios and landlords who have built up portfolios quickly using “no money down” techniques.

This is my last buy-to-let watch of 2012 so I would like to take this opportunity to thank you for following my column and to wish you all a Happy Christmas and a Prosperous New Year.

What a start to November, with more rain falling in the first few days than the average rainfall in a whole month.  In Surrey, where our business is based many roads have been flooded and drains overflowing. Whilst the force of Mother Nature hasn’t been too welcome, the sudden flood of buy to let products on the market has been received with more enthusiasm.

Let me share some of my insights into the criteria of some lenders’ buy to let products currently flooding the market.    

In October, our top seller was Abbey with market leading rates at 75% and flat fees. Although popular, the main challenge with Abbey is that one applicant must be employed, and have a minimum of one and a maximum of three secured credit commitments.  This narrows the audience of potential clients. However if the client fits the criteria, approval of the case is usually smooth sailing.  Abbey have the punching power to compete with the likes of TMW and BM Solutions who have dominated the buy to let market space for some time. 

Accord BTL is another lender with strong ambitions to be a major player in the buy to let market.  They recently sharpened their product range with a standout product of 70%.  Given the inevitable increase in business that Accord BTL will receive it is imperative that service levels of a good standard are maintained.

Kent Reliance currently has the lowest BTL 80% rate.

When it comes to choosing a lender based purely on service levels and speed of offer, there is currently only one choice, and that is BM Solutions.  Application to offer in a week is more than doable, and this is despite the overall tightening of criteria seen in the market.

TMW is still the only lender in the market that requires no income, and they have recently stopped regulated buy to lets and purchasing property from a family member.

Hinckley and Rugby has a number of exclusives with key strategic partners.

For Natwest it is important to understand if an applicant fits affordability.  Overall debt of a client cannot be more than 8 times Income.  Natwest is excellent with quirky properties for example short leases, concrete build and flats above commercial.

Kensington has made an unexpected returned to the market offering a prime proposition catering to applicants with defaults and CCJ’s registered over two years ago.  

Experienced landlords applying with Aldermore, need to prove income but are not required to have a minimum income. They define an experienced landlord as one who has owned and let a property for more than six month. 

Shawbrook Bank offers higher rates, but also offers a unique solution for more complex and exotic properties which may not suit the conventional lender. With competition in this space is limited Shawbrook are developing a niche for themselves.

The variety of products and competitive rates offered are positive and encouraging.  However, never before has it been more important to understand lenders criteria to ensure cases are correctly packaged, and to avoid unnecessary delays in the mortgage offer.

The Buy to Let Business Mortgage Club is proud to announce the addition of Accord Buy to Let to our panel of lenders.

Accord’s buy to let proposition is only available through their strategic partners and they currently offer market-leading 2 year tracker rates along with very competitive 2 year fixed and 5 year fixed rates, available up to 70% LTV.

Because Accord’s buy to let products are only available through their strategic partners, it is very flattering for the club to receive this endorsement.  With such keenly priced products available for 70%-75% LTV we look forward to working with Accord to help build their presence in the buy to let sector.

Chris Maggs, Accord’s National Account Manager – Buy to Let, said: “As we grow and refine our buy to let proposition it is essential we continue to build strong relationships with intermediaries. We are keen to develop our offering further with specialist buy to let firms and are delighted to be able to offer our products through The Buy to Let Business Mortgage Club who provide specialist advice to intermediaries. ”

All intermediaries wishing to register with The Buy to Let Business Mortgage Club can do so by either visiting www.thebuytoletbusiness.com/mortgage-club or by calling 01276 601041.

The Buy to Let Business Mortgage Club is thrilled to announce the arrival of BM Solutions to our panel of lenders.

A major player in the buy to let arena, BM Solutions offers intermediaries a lender that fully understands the sector and provides arguably the most efficient application process.  Their competitive product range, together with considering properties from as low as £40,000 and a maximum borrowing of up to £1m across the whole of the UK, means BM Solutions are the best placed buy to let lender available.

This is a momentous day in the short history of the mortgage club; to be able to make this announcement of BM Solutions being a part of The Buy to Let Business Mortgage Club demonstrates how committed both parties are to our members and the buy to let sector as a whole.  As a market-leader in the sector, BM Solutions gives our members a high-quality lender offering unrivalled products and service levels.

Phil Rickards, Head of Sales at BM Solutions, said “We have worked with The Buy to Let Business for a number of years and I’m delighted to be a part of this new venture. Its great to see a specialist BTL broker continue to offer support to the BTL Market as we see the sector continue to grow”

All intermediaries wishing to register with The Buy to Let Business Mortgage Club can do so by either visiting www.thebuytoletbusiness.com/mortgage-club or by calling 01276 601041.