What’s Happening Out There?
An honest, hard-hitting update from director, Matt Hardman
I’ve written this blog solely about the Buy to Let world, and not about the fabulous work the frontline NHS workers are doing or about the sad loss of life out there right now. Or indeed the overall economic impact. Please forgive me.
Buy to Let Mortgages. Right, well you could say some areas of the market have been decimated, certainly compared to two weeks ago. It’s a rollercoaster, but a rollercoaster where we’re mostly on a downward slide plummeting towards earth.
Lenders stopped lending (temporarily is the hope); Vida, Together, Octopus Property, Kent Reliance, Precise and Foundation Homeloans.
(This does get better by the way)
LTV’s reduced, products pulled, lenders letting their pipelines go. Others pulling offers, which hasn’t been seen since the credit crunch 12 years ago. Tens of thousands of borrowers calling lenders for three month payment holidays, sat on hold for hours, and with the Government guidance not clear enough – often whether they need them or not from what we can gather.
“It’s not free money!” Note to self – shouting at home in my lonely office makes no difference admittedly. “It will cost you more in the long run, we don’t know the underwriting implications for buy to let – take it only if you really need it!”
There are other significant reasons why, if you can, you should certainly abstain from taking payment holidays. At the same time, we appreciate there will be genuine cases and a real need, especially where tenants need financial support with their rent. There are other alternatives to mortgage holidays, after all, tenants may need help for longer than three months and it’s unlikely that lenders can extend this further without government assistance which many lenders don’t qualify for.
Lenders service centres have closed in some cases, workers furloughed in others. Surveyors consigned to their own homes, clipboards and tablets are now gathering dust.
But what does this mean for you, the landlord in the here and now? What’s the way forward if we’re stuck here working from dining tables and back bedrooms for three months or so?
Well, it’s definitely not as bleak as it would appear right now, especially given media hype and speculation regards lenders who have in fact made great strides in keeping the flow of funding going against this tough backdrop.
Certain purchases are still happening, if you are for example buying a vacant buy to let property, or a development site, many lenders are pushing forward cases without valuations ready for the release of lockdown. But the real game-changers, the real technological advances are in remortgages, the market is still moving well, from application to completion and swiftly in some cases.
Many lenders have really pushed boundaries to keep the flow of mortgage offers going for landlords (and homeowners for that matter) with the use of desktop or automated valuations (AVMs). BM Solutions, Paragon, TMW, Coventry, Virgin, Barclays, Post Office, Skipton to name but a few. It’s worth pointing out that for some ‘non-bank’ lenders, raising money through other markets, AVMs are highly unlikely to become a possibility. But others are opening AVMs up to purchases, which allows transactions to keep moving and be ready for the right time.
You have to hand it to them, it’s not taken long for this tech support to be handed down to landlords and in turn therefore; to tenants. After all, the stronger financial position a landlord is in, the more flexibility he/she can have with rent holidays.
The phone calls for payment holidays are starting to subside as we understand, which is just as well – hopefully lenders can concentrate on other areas of their business. Lender personnel are getting used to working at home, and still keeping lending funds moving into the right hands, which is incredible within the space of two weeks. Certain solicitors are also very well geared up to facilitate completions too.
I am sure that many businesses (industry permitting) are like us seeing their teams pull together more than ever before, which is ironic considering that we are so far apart and must remain that way. But technology is coming to the fore; Slack, Teams, Zoom, VOIP telephony, voicemail to email, VPN back to the server, the list goes on. All of these have been lifesavers for us.
So despite the lockdown, the outlook for some lending types is still very good indeed, and although our service levels are as good as they’ve ever been, we just can’t do quite as much as before in terms of far-reaching lending propositions.
But we have had mortgage offers in as little as five days from application.
What I would say, is that if you do need a better rate on your current mortgage deals, extra capital for whatever reason, do not hold back, because we don’t know how much worse it will get before things start to get better – and when they might get back to ‘normal’ is anybody’s guess. For you as a landlord, having liquid reserves is the very best way to combat this situation.
Yes, there’s no denying that there are significant issues out there in the lending world, and it’s not exactly ‘business as usual’ but with our help you can possibly circumvent many of those issues right now. But it does take the right planning.
One thing is for certain, we’ll all come back with a deep appreciation for life and business and a fair few lessons learnt about how we can work better in the future. It’s just going to require a lot of focus, planning and effort to come through this.
It’s just as well our team at The Buy to Let Broker have these traits in spades; tenacity, grit and determination are our middle names.
We’re here when you need us, hopefully we can all come through this without too many long lasting scars; landlords, brokers and lenders alike.