Being able to accurately source buy-to-let mortgages is one of the challenges of successfully placing cases for landlord clients. The marketplace for buy-to-let finance has always been very dynamic with daily changes occurring to lending criteria and product options. It requires skill and resourcefulness for intermediaries to determine the best solutions for each scenario presented to them.

Some ‘vanilla’ cases are straightforward with few criteria issues to resolve, so finding suitable mortgage products quite often comes down to the cheapest rate currently available and the preference of the client for the rate type and term.

Things get trickier when presented with a more complex case where a more in-depth knowledge of lending criteria is required to identify the best providers. Experience counts for a lot with buy-to-let mortgages and being familiar with which lenders do what can save huge amounts of time when first assessing an enquiry.

Learning shortcuts is a key element of successful sourcing, especially when dealing with specialist lenders and more complicated scenarios. For example, at TBMC we get a lot of enquiries for HMO properties so establishing the number of bedrooms and whether a licence has been obtained can quickly eliminate certain lenders and give a more manageable shortlist of lenders to consider.

Likewise, with expat cases; finding out which countries a lender will accept and establishing the applicant’s income are always key facts as they can rule out many providers at the outset, saving time and effort.

TBMC has had a surge in holiday let enquiries since the coronavirus pandemic due to the rise in popularity of UK staycations. Again, asking pertinent questions at the start can really speed up the process such as where is the property located, what is the rental income during high and low seasons, are there any restrictive covenants?

Of course, most brokers have a range of tools at their disposal including sourcing systems, criteria databases and a range of different calculators to help them find solutions, although the reliability of information can sometimes be a concern. The dynamic nature of the buy-to-let mortgage market means that the providers of product data are constantly having to update their systems to present an accurate picture of what is currently available.

At TBMC we use our own bespoke buy-to-let mortgage sourcing system and criteria database, so we know how reliable our own data is and have a team dedicated to keeping it updated daily.

With any sourcing system, having an intelligent way of narrowing down your search according to specific client requirements can be a huge time-saver.

TBMC’s Sourcing and Quotation system has numerous filters such as for HMOs, limited companies, expats, age, tax status and portfolio size which can help to quickly identify suitable providers. However, we do not rely solely on the system when dealing with complex cases and place a lot of value in maintaining relationships with the many supportive Business Development Managers (BDMs) in the buy-to-let sector. BDMs can be an excellent resource and sounding board for checking whether a case is likely to be accepted by a lender and it is good practice to make use of their knowledge.

Although sourcing buy-to-let mortgages can be challenging, it makes the work varied and interesting as no two cases are exactly the same. It certainly keeps us on our toes!

There are encouraging signs in the buy-to-let market that it is making a recovery since the housing marketing opened up at the beginning of May with the return to visual inspections in England. Since then we have seen a flurry of activity from lenders as they reassess their buy-to-let mortgage propositions in response to greater demand and competition. This has resulted in more products being offered, better rates, higher LTVs,increased maximum loan sizes and many other criteria tweaks that reflect the growing confidence among both lenders and landlords.

There are other factors that have come about as a result of Covid-19 that may also help the buy-to-let sector to rebound and provide a boost to mortgage business for intermediaries. The temporary change to stamp duty on properties valued up to £500,000 was predicted to create a surge in buy-to-let purchase applications and there is evidence that this has started to happen since the measure was announced in July.

At our business, since the end of July, the percentage of enquiries about mortgages for buy-to-let purchases has risen to around 72 percent compared with just below 50 per cent during the month of June. This is a significant change and indicates a renewed level of purchase activity from landlords. A recent poll carried out by Cherry, a mortgage adviser forum, showed that over half of brokers had experienced increased buy-to-let business with nearly 30 per cent reporting an increase in individual purchases and 27 percent reporting an increase in limited company purchases.

There is clearly a pent-up demand from landlords who may see now as the perfect time to expand their portfolios and take advantage of good opportunities with more properties available on the market and vendors eager to make a deal. The pandemic situation has also curbed people’s spending and provided an opportunity to save over the last 5-6 months, savings which could now be used as deposits for new property investments. With savings rates so low – around 40 per cent of easy access accounts are earning 0.1 percent or less - investing in property may be an even more attractive option; Halifax reported an average rise in property values of 1.6% in the month of July.

As the coronavirus remains in the UK and as the economy tries to recover, the number of income and job losses has been staggering and the damaging effect on many people’s livelihoods is hard to witness. It is difficult to predict how the next 6 months will unfold and what new job opportunities will develop for those looking for work. It may result in people becoming more mobile and perhaps relocating to new areas to gain employment. This could increase demand for rental accommodation from new tenants including those who don’t want to commit to purchasing property in a different area.

Covid-19 has had a dramatic effect on UK workplaces with an increasing number of staff working from home. This trend may become the new norm as businesses recognise the potential benefits of home working. This may also impact on the type of properties that tenants require – perhaps seeking extra rooms to accommodate a home office.

What is clear is that as we recover from the impact of the pandemic, tenant demand for rental property remains strong and that landlords are keen to grow their property businesses.