This year, in Birmingham, top buy to let professionals from around the country gathered to discuss the changes the market has seen over the last few years and their strategies and offers to consumers and mortgage brokers going forward. It was interesting to see the divergence between those looking to approach this with an entirely prime buy to let offering such as Accord and those looking to tackle all the niche areas such as HMO Mortgages and Limited Company Mortgages (Paragon and Complete).
Aldermore Bank Buy To Let Presentation
First up in the session we attended was Aldermore. Rob Barnard, the Head of Intermediary Sales for the Bank was there to explain the challenges of launching a new lender in these difficult times and the approach they have taken to carve out a place for themselves in the specialist buy to let market. The first thing that is worth noting is that they are a real bank. Unlike many new lenders which rely entirely on the wholesale money markets just as the now defunct Northern Rock used to before the crisis, Aldermore has savers. They are all attracted through the internet and some of the rates offered are very competitive. This allows them to fund their own lending and be much less dependent on the whimsical nature of the London finance markets. One of the big parts of the Aldermore offering is they don’t credit score as Rob Explained.
Refer meant ‘no’ with many lenders [who credit score] … our book is performing really well considering we aren’t using the crutch of a credit score we’re delighted with how it’s doing
Rob Barnard, Head of Intermediary Sales, Aldermore
For those of you who like your quirky facts, Aldermore means: “A tree that thrives in arid territories”. Just about every niche in the specialist buy to let arena is covered by Aldermore but here are a few highlights:
- No Credit Scoring
- HMO Mortgages
- Limited Company Mortgages
- A Couple of Missed Credit Card Payments
- Only Deal With Brokers / Financial Advisers
Accord Mortgages: Prime Buy to Let Offering
The second presentation was led by Jeremy Law from Accord. They have taken the absolute opposite strategy and are looking to tackle the ‘superprime’ sector of the buy to let market. They will be looking to offer innovation and price driven competition to the clean end of the market. They presented some interesting survey findings which are outlined below:
- 69% of buy to let properties have a mortgage
- Half have had arrears at some point
- The biggest reason for choosing a lender was mortgage broker advice
Jeremy also announced some good news for landlords when it came to future product innovation by the Yorkshire Building Society owned lender. Their feeling is that current niche areas such as Limited Company Buy to Let are unlikely to be considered niche for much longer as the risks are basically the same. He also felt that demand for ‘cashback mortgages’ and other price driven products would likely increase significantly in 2012.
The Complete Picture
Complete are similar to the brokers that support enquiries here at ProBuyToLet in that they deal with all the lenders on the market, however unlike our brokers they don’t deal with the public. Instead they help smaller brokers handle niche cases effectively and take care of lender relations for them. As a result they have significant experience in the market. They primarily highlighted the areas of big growth which at the moment included the small building societies which have started to focus more on holiday lets (Bath for example) and the huge move towards HMO mortgages by landlords seeking the higher yields that multiple occupancy property can deliver.
Paragon Buy to Let: Another Specialist Offering
Paragon are largely in the same market as Aldermore focussing on HMO Mortgages and Limited Company Mortgages. One of the big differences is that they are really looking to avoid any of the patchier credit cases and they do credit score. Their presentation was more focussed on the reasons why the buy to let market is currently so strong. They highlighted the changing social conditions, higher divorce rate and more young people choosing to live alone as big factors in the increased demand for flexible rented property. Towns with high levels of Polish immigration were also seen as booming areas for rental demand. Perhaps something landlords need to keep a close eye on as workers moving into an area not only results in higher short term demand but is an indication of the availability of jobs and work which will sustain demand in the longer term.
So that’s it, a complete round up of the presentations and discussion at the Birmingham 2012 Buy to Let Forum. If you need some advice from a whole of market buy to let broker, give us a call now or fill in our short enquiry form.