Ensure landlords get the best out of their investment
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Brokers are well placed to add value for their buy-to-let clients by providing ongoing advice as well as good deals
As a landlord myself and a non-broker who occasionally advises landlords about investments - for example, what type of property to buy - I’ve always taken a keen interest in the types of mortgage loans available.
These days my customers are mainly organisations wishing to improve the products and services they offer landlords.
Some of my customers are banks that provide mortgages to landlords, and I believe this has given me a useful insight into Apart from my clients in the banking sector most lenders still provide little or nothing in the way of advice to would-be landlord borrowers - pretty amazing given the tsunami of rules that has hit the sector in the past few years.
This should be great news for mortgage brokers as it gives them an opportunity to fill a yawning vacuum of advice.
Brokers who attend my talks usually have at least one or two properties they own and let out.
This puts them in an even better position to pass on their experience and advice to clients.
Some may say that now the buy-to-let sector is so short of competitors and products it ought to be simple for clients to compare mortgages online and complete transactions at high street branches or direct with lenders.
But even for the most vanilla case - such as a client with a high income and 30% equity buying a good value two-bedroom property in excellent condition in an area of high tenant demand - a broker can still add value and stop them going direct to the lender.
Apart from their knowledge of the criteria of each lender, a good broker who knows their local patch or who is a landlord themselves will know which local areas are the best to invest in and which should be avoided. This kind of information can be invaluable to investors.
And once the mortgage is set up brokers should continue providing advice.
From the start clients will need to know about how to reference tenants, tenancy deposit schemes, Energy Performance Certificates and gas safety checks.
Most lenders don’t provide information about these things beyond telling applicants to ask letting agents about them.
But the quality of letting agency advice is patchy and can be awful. Anyway, it’s the landlord who will ultimately be held responsible.
And they are the ones who will have to face three or four months of no rental income if a letting agent finds them the tenant from hell.
So once the property is let brokers should keep in touch with their buy-to-let mortgage clients and provide regular advice that will allow them to keep their properties let to contented tenants at all times.
Happy tenants make happy landlords who come back to brokers for their next mortgage.
DAVID LAWRENSON DIRECTOR LETTINGFOCUS.COM
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