Around a third of brokers’ buy-to-let business will to come from limited company clients in the next few years.
This prediction was made by Mortgages for Business chief executive David Whittaker, who said there was “considerable opportunity” for brokers in this sector, despite a shrinking buy-to-let market.
The company’s own research suggests that the buy-to-let market is currently evenly split between limited company and sole name business. However, seven out of 10 new purchases are now completed via a limited company structure.
Meanwhile One Savings Bank’s sales director Adrian Moloney pointed out that there were now 17 lenders offering close to 300 limited company products.
Speaking at the Financial Services Expo in Manchester, Whittaker predicted that falls in buy-to-let lending were starting to plateau. However brokers should not expect an upturn in this market until at least 2020.
Whittaker says: “In 2018 we expect there to be £32bn of gross lending, and this will fall to £28bn in 2019. However we do believe this will have bottomed out by 2020, and a reshaped buy-to-let market is where advisers will do very well.”
Whittaker also called for buy-to-let lenders to be more transparent about their policies for properties that fail the new Energy Performance Certificate regulations.
These regulations came into force on 1 April this year. These new rules make it illegal for landlords to start new tenancies if a property has an EPC rating of F or G.
Talking at the event Whittaker says: “What will lenders’ position be on properties which don’t make the grade?
“As of now only three lenders have made their position clear on this issue. Clients will need the right EPCs on all their properties, but 4.3 per cent of properties are currently in the worst “G” rating – and over 11 per cent of these are in the private rental sector so this could be a major issue.”
He also warned brokers that regulatory and political changes in this sector were unlikely to abate in the near future.
He cited research from Newham, in London, which found that 14,000 landlords within the borough had no relationship with HMRC. He says this this is likely to lead to continued interest from HMRC in the sector “because they sense there is a lot of tax to be paid”.