STAMP DUTY HOLIDAY DEADLINE
IN THE SPOTLIGHT...
LISA MARTIN, TMA DEVELOPMENT DIRECTOR, RECENTLY INTERVIEWED PHIL RICKARDS, HEAD OF BM SOLUTIONS, TO FIND OUT HIS PREDICTIONS FOR THE BTL MARKET IN 2021.
LM: So, Let’s kick off…
The facts remain that without a strong private rental sector in the UK, the housing gap we currently have, would be much bigger!
With tenant demand for property growing, and various other social and demographic shifts, buy to let continues to be a good long term investment option for landlords, whether their decision and location points to either (Capital Growth) or (Investment returns).
So the million dollar question, what is the predicted size of the B2L market for the year ahead (2021)?
PR: The million dollar answer, it’s amazing to think that the 2020 BTL gross lending market is likely to finish at around £40bn and only marginally down on 2019 considering everything we’ve been through this year. Whilst we may not have the stamp duty benefits passed March 21, we will definitely see a great start to the year in terms of completions ahead of the stamp duty deadline in March and it’s feasible to think that we could see a 2021 market finishing in excess of 2020 as demand for rented accommodation grows further.
LM: What are the opportunities for intermediaries?
PR: We have seen upward growth in the age of tenants, in the ages between 55-64 year old and 65 plus
LM: There has been a lot of focus on the Buy to Let, Purchase Market, particularly given the reduction in Stamp Duty. This highlighted a shift away from the predominantly re-mortgage/refinance market pre COVID.
What is your estimate of the mix of purchase/re-mortgage business at the end of 2020, and do you have a view of whether this mix will remain, or realign in 2021?
PR: There is no doubt that the relaxation of stamp duty has seen more landlords acquire property in 2020 and we’ve seen our own purchase business grow significantly over the Summer months and beyond. At a market level, you could quite easily see further growth in the purchase business which is great news for the Private Rented Sector given the outlook for rental demand going forward.
LM: Could you briefly explain what may have contributed to this shift?
PR: There is no doubt that landlords treat their property portfolio as a business whether big or small and will constantly be reviewing the profitability of that business at any given point in time. Despite many cost challenges over the last 4 or 5 years, they have proved to be a resilient bunch and this was reflected in our latest Q3 BVA-BDRC Landlord Panel research which found over 85% of landlords said they were making profit whether they have small or large portfolios.
LM: We saw the recent headlines, ‘More than 800,000 renters in Covid-related arrears’ – What do you believe should be done to support this sector?
Are there any statistics that you could share surrounding the Landlords/Portfolio performance, who may have tenant arrears?
PR: We have already seen significant Government support for mortgage holders in general with the introduction of payment deferrals which extended to landlords also and we’ve seen many landlords passing this onto tenants who have really struggled. We’ve also seen the no evictions period extended a number of times to support tenants at a time when they have needed it most. From a BM perspective, we have also seen the majority of landlords return from payment deferral schemes.
LM: You recently announced the launch of your new broker technology Solution. * What are the key takeaways for Brokers?
PR: BM Solutions Online had been in design and build way before with onset of the pandemic and I’m particularly proud of the team for delivering the system to market during one of the most challenging periods in mortgage market history. The system will look and feel similar to that used by Halifax Intermediaries so brokers shouldn’t have to learn too many new tricks! Brokers will also see more efficient case updates and the launch is just the start of a series of improvements we plan to introduce it in the next 12 months, including further enhancements to our portfolio landlord and product transfer propositions.
LM: Finally – What are your three positives for the B2L market in 2021?
PR: Firstly, I’ve already touched on the fantastic start I think the sector will get off to in terms of completions although we will all need to me mindful and indeed patient as lenders and solicitors in particular will be working extremely hard to make this happen in time.
Secondly, as the true economic impacts of the pandemic unfold during 2021, we are likely to see potentially increased demand for accommodation in the Private Rented Sector which in turn could lead to further activity in the BTL mortgage market.
Finally, I think we all need to take heart in just how resilient the sector has proved to be in the wake of these unprecedented challenges. Brokers have a great opportunity to stay close to their landlord