58% of brokers operating in the buy-to-let sector have more landlord clients who want to expand their portfolios than sell properties, according to research carried out for United Trust Bank Mortgages’ new white paper.

UTB’s new white paper looks at the health of the specialist mortgage sector two years after its inaugural report and this time included research on the specialist buy-to-let market.

NOT SO QUIET

Feedback from brokers who took part in the research was that whilst the buy-to-let market was not as buoyant as it was before interest rates were rapidly increased, there were still lots of opportunities with activity in the market not as poor as often suggested in the media.

When asked if their buy-to-let business had declined in the previous six months, 60% of brokers responding disagreed, and only 32% of brokers said that most of their buy-to-let business was Product Transfers.

However, 61% of brokers felt that landlords with just one property were more likely to exit the market than those with buy-to-let portfolios.

Matthew Arena of Brilliant Solutions went as far as saying that “Larger portfolio landlords are very positive. They are cash rich and waiting for opportunities.”

SEARCH FOR YIELD

65% of brokers said that landlords expanding their portfolios were often considering more unusual and higher yielding properties including Houses of Multiple Occupancy (HMOs) and Multi Unit Blocks (MUBs). Specialist buy-to-let lenders, including UTB, are able to help with these purchases but also with more unusual property types and those of non-standard construction as well as those near or touching commercial.

One broker from Surrey said, “Clients are looking for more quirky properties”, whilst another broker from Bucks said “Corporate lets – this market is growing”.

WHITE PAPER

UTB Mortgages’ 2024 white paper looks at trends in the specialist residential and Buy-to-Let mortgage market as well as second charge loans. It examines the lending landscape and reveals broker views on challenges they face and potential areas of opportunity for growth, and the importance of education and collaboration between lenders, distributors, packagers and brokers.

Over 130 brokers took part in quantitative research and this was followed by a number of deep-dive calls with individuals to obtain a more detailed understanding of the data collected. Prominent industry figures including Stephanie Charman, Group Partnerships and Propositions Director at Sesame Bankhall Group, Liz Simms, Managing Director of Connect Mortgages, William Lloyd-Hayward, COO of Brightstar Financial, and Matthew Arena, Group Managing Director at Brilliant Solutions were among those who took part in interviews relating to the research.

The report also includes independent research from the Office of National Statistics (ONS), Registry Trust, UK Finance and the Insolvency Service.

“most brokers are still finding opportunities in the buy-to-let mortgage space”

Buster Tolfree, director of mortgages – United Trust Bank, said: “Just as we’re finding in the residential market, mortgage brokers are increasingly helping landlords with specialist buy-to-let mortgages either because of the properties they’re buying and refinancing, or their own circumstances.

“The great news for brokers is that there are a growing number of specialist mortgage lenders, UTB included, which can cater for them.

“Even more pleasing is that most brokers are still finding opportunities in the buy-to-let mortgage space, and this reflects our own experience over the last year. Landlords are looking to acquire more unusual types of properties and in locations which may not suit homeowners but nonetheless make great rental properties, for example flats over or next to commercial. These purchases often deliver higher yields than a traditional three-bed semi and help to mitigate the higher cost of borrowing.

“At UTB our buy-to-let mortgage sales are, to date, c.35% higher than for the whole of 2023, and applications c.53% up in the same period which shows that there’s demand and that brokers like what we’re doing.”