Polishing up that buy-to-let crystal ball

In the current climate, any predictions must carry a huge caveat with them as we are still embroiled in Covid-related uncertainty. Although confidence does remain high from a housing, lending and intermediary perspective. And with good reason.

As the residential housing market experiences a slight - but fully expected - lull, it’s evident that intermediaries are looking further afield for new business opportunities in 2022. So, with a new year around the corner and a fresh start on the horizon, where might these opportunities emerge from?

The specialist buy-to-let market is the obvious place to start. In Q4 we are seeing sustained interest and enquiries from intermediaries with landlord clients who are looking to utilise limited company options and borrowing facilities. A trend which is only likely to continue. As highlighted in a recent webinar poll conducted by CHL Mortgages, held in conjunction with Knowledge Bank, which outlined that an overwhelming 96% of brokers expect to write more limited company business in 2022. Only 4% thought that they would write less.

Further polls were taken during the webinar around limited company activity and the challenges being faced.

When asked how much limited company buy-to-let business brokers are currently writing, 69% said they are writing one to five cases a month, a quarter (25%) responded that they are writing no limited company business and 6% revealed that they are writing in excess of five cases a month. Focusing on the challenges facing brokers when placing limited company business, 59% cited a lack of knowledge around limited companies, 46% said structure and shareholding, 28% highlighted conveyancers and 20% pointed to independent legal advice (for shareholders) as being a challenge.

This data underlines the potential of this lending type and the need for additional support from lenders active in this sector to help them maximise the available opportunities as they arise.
Looking forward, the focus of professional landlords will continue to shift from the more vanilla buy-to-let property types towards HMOs, MUFBs, new build, ex local authority and commercial properties. A trend which will place an even greater emphasis on specialist lenders and the types of solutions which suit the progressive needs of such landlord types.

With speculation intensifying around further hikes in the base rate, we expect a boom in remortgage activity as more landlords will lock into fixed rate deals for longer and take advantage of a competitive buy-to-let lending environment. With this in mind, we expect our five-year fixed rate range via a limited company vehicle to make up a strong proportion of our lending in Q1, Q2 and probably beyond.

Competition across the buy-to-let marketplace is likely to intensify and this is great news for intermediaries and their landlord clients. From a lending perspective, in order to stand out and grow market share, it’s all about demonstrating a commitment to providing the highest service standards, promoting transparency throughout propositions and adding real value. Attributes that we will certainly be focusing on in 2022.