It has been an interesting period for the buy-to-let market, with many lenders updating their product ranges or launching new product lines. There have also been some new launches that demonstrate the lenders’ commitment to innovation in the BTL market.
Among these, Foundation launched a landlord special with free valuations and application fees for portfolio landlords remortgaging, and Fleet increased its LTVs to 80 per cent across its ranges.
Another welcome addition is ‘Permitted Development Rights’ becoming available on Precise’s Refurbishment Bridge Product. Permitted Development Rights allow property owners to carry out small extensions and conversions without having to obtain formal planning permission. Property investors can now utilise Precise’s product for even more deals, with the main benefit of guaranteed refinance, at an amount known in advance, on completion of the works.
Advisers have been conscious for some time that BTL applications, particularly for portfolio landlords, often take a long time to process. Any innovation on this that lenders can bring to the table is great news for both investor and adviser.
West One, traditionally a bridge and second charge lender, has launched its first BTL term product. For remortgages, it is offering an in-house fast-track legal process, meaning that after offer its team can complete the mortgage in a very short time.
UTB has a similar offering for its residential term products but has also launched a free desktop valuation on its BTL bridge products with up to 55 per cent LTV for property values up to £1m.
Vida is also keen to improve timeframes and streamline processes. For selected partners, it has dedicated lending assessors and underwriters, with one underwriter managing all applications for a portfolio client submitting several applications.
For landlords in a hurry to raise funds to complete refurbishments on a property, another option is available from Funding Circle. As it offers unsecured business loans, there is no property to value and no legal work to complete. Instead it takes a personal guarantee from the landlord and provides a loan size based on the turnover and profits of the property business. It will lend up to £150,000 for the landlord to refurbish and develop their property portfolio and funds can be approved and released in just a week or two.
More innovation in relation to speed is definitely overdue. In the residential market, lenders such as Digital Mortgages from Atom have developed technology that completes fully digital checking on applications, meaning it is not unknown for applications to go straight to offer within minutes of submission. Word has it that the bank is currently developing a similar digital process for its commercial mortgage arm, which includes its portfolio BTL products, and that could be groundbreaking.
One other interesting initiative is advisers being able to complete digital valuations inside customers’ homes. Using Smart Software from Legal & General, instant valuations are available that would remove any uncertainty of the property’s value from the outset and make researching lenders quicker and acceptance around the property more certain. Three major lenders already use this software for their own valuations, and the next step would be to facilitate and accept the adviser completing this at an earlier point in the process.
Some lenders and providers are already using API technology to help advisers submit applications via their customer relationship management systems. CRM systems such as OMS can gather the fact-find and portfolio details and, at the touch of a button, submit the data to the lender’s system, avoiding the need to re-key and the associated mistakes and delays that can often happen.
While these initiatives are being developed further, advisers can speed up some BTL applications by not ‘drip feeding’ documents to lenders, which causes the biggest delays. Using lenders with a clear underwriting policy and ‘packaging’ the applications correctly, to include all the documents and information the lender will need up front, gives the application the best chance of being successfully underwritten the first time it is seen, rather than being delayed by going backwards and forwards.
Liz Syms, chief executive, Connect for Intermediaries