Approximately a third of mortgage brokers’ buy to let business will come from limited company clients in the next few years.
The prediction came from Mortgages for Business chief executive David Whittaker. Whittaker stated that there remained ‘considerable opportunity’ for mortgage brokers in the buy to let sector, despite a shrinking rental market.
At the Financial Services Expo in Manchester, Whittaker stated that falls in buy to let lending were beginning to stabilise but an uptick is not on the horizon. He said: ‘In 2018 we expect there to be £32 billion of gross lending, and this will fall to £28 billion 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.’
Research from Mortgages for Business 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 proving its popularity.
According to One Savings Bank sales director Adrian Moloney, 17 lenders now offer close to 300 limited company products for mortgage brokers to choose from.
Whittaker also called for increased transparency from for buy to let lenders regarding their policies for properties that fail the new Energy Performance Certificate regulations.
The regulations that came into force on 1 April this year make it illegal for landlords to start new tenancies if a property has an EPC rating of F or G.
Whittaker said: ‘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.’