Understandably all eyes appear to be on our politicians at the moment. Not just to see how Brexit might play out – answer: I wish I knew – but in terms of how this new Prime Minister and government might look to influence the housing and mortgage markets.
From the perspective of the buy-to-let and private rental sectors, the initial noises coming out of Boris Johnson’s cabinet are relatively positive.
Looking back at how Johnson has tended to view the PRS, it would seem he favours a ‘less is more’ approach. How that might translate into policy however remains to be seen, and while I don’t doubt that he understands the importance of a strong rental market in terms of helping close the UK’s housing gap, I don’t for one minute feel he’s not going to prioritise homeownership. It has been the conservative party way for many a year and it’s unlikely to change now.
However, we might all believe that a better understanding of BTL and a move away from the demonisation of landlords could be forthcoming. Johnson has a tendency to move whichever way the political winds are blowing, but even he might recognise that the landlord community can only take so much regulatory and taxation change.
From our perspective, it is clear that demand for BTL activity remains strong; predominantly this is a refinance demand but also a growing focus on boosting portfolios from our professional and portfolio clients.
I read recently that one adviser had seen a noticeable uptick in demand for two-year products and this might be because landlords feel there will be greater political and economic clarity in 2021, or it might well be that landlords are less inclined to wait five years to see the lay of the land, and are preferring a more shorter-term outlook and review period.
Five-year products continue to offer increased stability over a longer period and my view is that greater numbers of borrowers are going to be seeking such products because of that. Plus of course there is highly competitive pricing at present in all BTL areas – the differential between two- and five-year deals has narrowed considerably and, even with the slight extra costs, landlords might be feeling they are willing to pay a little more over a longer timescale in order to have complete certainty.
The good news for advisers is that there is strong appetite to lend, and a growing demand from landlords. Even with all the political turbulence, that should continue, and therefore it will pay for firms to retain specialist BTL advice as a core part of their proposition for many years to come.