View more on these topics

Lenders need to be more transparent about portfolios

Ian Boden, Sales Director, LendInvest

For all of the talk of doom and gloom around the prospects for buy-to-let over the last couple of years, the truth appears to be rather different.

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that as many as four out of ten portfolio landlords are looking to expand their portfolios in the next 12 months.

This is unquestionably good news. The government is right to focus on improving the rate at which we build new homes, but a thriving rental sector – populated by responsible landlords for whom property is more than just a sideline – will always be needed.

However, while portfolio landlords appear to be well placed, there is a danger that the intermediaries who arrange the property finance these borrowers need are suffering from a lack of transparency about how lenders assess cases.

There is no doubt that the PRA underwriting changes have significantly increased the workload of intermediaries. We regularly hear from brokers that lenders have interpreted the new rules in radically different ways, leading to a wide variety of approaches when it comes to assessing portfolio landlords.

Not only are lenders asking for different sorts of information about the borrower’s portfolio, but they also want different levels of granularity of that information.

This has made life much more difficult for advisers. It’s one thing to have to keep on top of the thousands of different rates on offer, but they also need to have a formidable memory to keep on top of the vastly different portfolio requirements, which only makes the advising process that much more long-winded.

Part of the problem here is a lack of transparency from lenders. Sure, as an industry we have done an acceptable job of keeping brokers informed on what details we need from the borrower, and how we handle the existing mortgage application.

But in my view we haven’t gone anywhere near far enough in explaining to intermediaries precisely why lenders need all of that information on the rest of the portfolio, and how those details are used to assess a borrower.

Yet that information is crucial for a good intermediary. They already have the relationship with the borrower and likely a decent idea of the position of the portfolio. If intermediaries are informed on just how that portfolio is assessed, then they will be better placed to deliver the advice their client really needs.

That need for greater transparency is something we want to address at LendInvest. That’s why we have published a comprehensive lending criteria document for buy-to-let loans, which outlines not just the details we need but also how we use those details to get a better picture of the borrower and their position.


LendInvest offers Buy-to-Let mortgages to portfolio landlords. Got a case in mind? Find out more here.

Recommended

Equity-release-house-home-700.jpg

Later life advisers urged to “signpost” support services

Later life advisers may be in a prime position to put clients in touch with charities and support groups, according to a leading charity for the elderly. Speaking at the National Later Life Adviser Conference, Silverline’s chief executive Sophie Andrews, highlighted the role mortgage advisers can play in supporting this part of society. She says […]

Rental-Contract-Pen-Paperwork-Mortgage-700.jpg

Tenants lose £22m to rental fraud in four years

Tenants have lost more than £22 million to fake landlords and other rental fraudsters since 2014, official figures show. Between 1 April 2014 and 31 March 2018, 18,645 reports of rental scams were made to Action Fraud meaning that victims lost an average of £1,396 each. Action Fraud is now warning potential tenants, and students in particular, […]

Handshake

Coventry BS hires non-executive director from FCA

Coventry Building Society has appointed a Financial Conduct Authority committee member to its board, as a non-executive director. Iraj Amiri is currently a member of the FCA’s Regulatory Decisions Committee. Amiri is a chartered accountant and has worked for a number of financial services companies, including Deloitte and Schroders. He has experience of working in […]

Retirement interest-only mortgages… five things you should know

Tom Gurrie offers some key insights into retirement interest-only mortgages. The rules have changedLast month the FCA redefined retirement interest-only mortgages – RIOs – as standard mortgages, not lifetime, to improve access to borrowing for older consumers, including interest-only borrowers facing shortfalls. Expect a boost in the number of these deals once lenders work through […]

Bridging is no longer a dirty word

It’s not that long ago that short-term finance, or, perhaps more specifically, bridging finance were viewed as dirty words by mortgage brokers. The rates on offer were punishing, meaning there were only a handful of situations where it would be appropriate to arrange one. Some lenders didn’t exactly uphold great reputations for service standards either; […]

Newsletter

News and expert analysis straight to your inbox

Sign up