A bright future for buy to let
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A Bright Future for Buy to Let. NLA Mortgages Andrew Rudkin. Agenda. Introduction Is this a good time to be a Landlord? The BTL marketplace Looking forward Paragon Mortgages / Mortgage Trust NLA Mortgages Summary and Questions. Introduction. Provided by TBMC Group

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A Bright Future for Buy to Let

NLA Mortgages

Andrew Rudkin


  • Introduction

  • Is this a good time to be a Landlord?

  • The BTL marketplace

  • Looking forward

  • Paragon Mortgages / Mortgage Trust

  • NLA Mortgages

  • Summary and Questions


  • Provided by TBMC Group

  • Award winning specialist broker and distributor

  • Systems and expertise

  • Paragon Group

Owner-occupation and social renting in decline

Owner-occupiers and social renters

  • UK owner-occupation peaked at 69.7% in 2002 – fell to 64.7% by 2011

  • Social housing fallen to 18.1% from 24.4% in 1993

  • Social housing peaked at 30% in 1971



Source: DCLG

Owner-occupation and social renting in decline

UK private rented sector

  • PRS currently accounts for 17.2% of housing stock in the UK

  • Savills forecasts PRS will account for 27% by 2020

  • PRS is the only growing housing tenure- increased by 93% since 20014.7 million (more than one in six) properties

  • Forecast to grow to 5.8 million by 2018

  • Provides vital accommodation for diverse range of tenants, including mobile workers, young professionals, students, economic migrants

  • Important social role - housing people on low incomes, with 25% of PRS in receipt of Housing Benefit

  • Makes an important economic contribution

  • UK PRS worth £500 billion - larger than UK commercial property sector

BTL introduced

1988 Housing Act

000s units

Source: DCLG/CB Richard Ellis/Savills

Why is now a good time to be a landlord?

  • Property Prices.

    • Average current property prices up 7.1% on 2012

    • Future property prices? ...forecasts reflect continued steady growth.

    • Supply & demand – current shortage of around 1 million homes in UK.

  • New housing remain at low levels

    • Normally around 175,000 units per annum

    • 142,000 completed in 2011

  • Need to build 240,000 new homes each year

Why is now a good time to be a Landlord?

  • 1.8m people currently on council house waiting lists in England

    • Up 10% over last 5 years

  • Increasing Rents.

    • Average rental return of 5% for houses and 5.2% for flats

    • 39% of landlords increased rents in Q4 2013

  • Outlook for Private Rented Sector.

    • PRS is growing –

    • up from 10.1% of housing stock in UK to 17.2% in 2011 and predicted to increase to 27% by 2020 (Savills)

Tenant Demand Remains Strong

Mortgages for first time buyers still difficult with stringent underwriting criteria

Growing student population.

Growing immigrant population.

Mobile workforce.

Split families.

Personal choice...movement towards European market?

Average void period – 3 weeks

46% of ARLA agents reported more tenants than properties

Why is now a good time to be a Landlord?

The Buy to Let Marketplace

The BTL marketplace


  • Competition vastly reduced

  • Market dominated by two lenders

  • Criteria more restricted

  • Higher gross margins reflect high cost of funds and capital

  • Particular shortage of products for professional landlords

Impact of financial crisis

  • BTL seen as low risk / higher margin opportunity for lenders

  • More lenders/more funding/more products

  • Underwriting more flexible and criteria improving

  • Lloyds and Nationwide still dominate


Buy to Let Lending

  • The Buy to Let Marketplace

    Total MarketBTL Market% Share

  • Estimated natural Buy to Let mortgage market - £25bn - £30bn

Majority of lenders impose stifling aggregate lending limits

Buy to Let Lending

Lenders and their approach to market

  • Only a few specialist BTL lenders cater for the professional landlord sector - Paragon, Aldermore, Kent Reliance and TMW.

  • What differentiates the professional sector?

    • HMOs and multi unit properties

    • Variety of tenant types (including DSS and students)

    • Larger portfolios

    • Limited company lending

    • More complicated underwriting propositions

    • Larger lending limits

Buy to Let

Looking forward

Continued recovery in 2014 with more lenders

Concentration on mainstream buy to let

There are now 30 plus lenders offering a wide range of products

Overall Buy to Let lending has proven to be very resilient during the crises with many lenders reporting lower arrears than residential mortgages

The Buy to Let Marketplace

The Buy to Let Marketplace – looking forward

Mortgage products:

More choice – fixed rates/discounts/trackers

Easing of rental requirements

Increase in available products

Over 2000 products available in 2007

Down to less than 80 in 2008

Over 400 products now available and expected to increase

Paragon Mortgages

Professional landlords

HMOs – 3 years experience as a landlord

Multi Unit properties – max 20 units, 3 years experience

Limited company Lending

Under 6 month ownership remortgages

Portfolio lending up to £5m

Lending up to 75% LTV

Maximum loan £2m per property

No restriction to number of properties in a portfolio

All the above difficult to place elsewhere!

The Buy to Let Marketplace – looking forward

The Buy to Let Marketplace – looking forward

  • Wide range of acceptable tenancies

    • ASTs (6-12 months)

    • Student and Housing Benefit tenants

    • Company lets (up to 3 years)

    • Local Authorities and Housing Associations (up to 5 years)

  • New Build

  • Experienced “In house” surveyors

  • Rental calculation assessed on individual or joint tenancy

The Buy to Let Marketplace – looking forward

  • Mortgage Trust

    • Simple BTL product range

    • Simple application process, immediate decision

    • Competitive rates

    • Standard properties, single ASTs

  • Available through NLA mortgages

NLA Mortgages

  • Bespoke mortgage service for NLA members

  • Whole of market offering

    • Currently 30 Lenders with close to 400 products

  • Self select from a web based sourcing system

  • Cash back incentive on all products available for NLA members only

  • Website – www.nlamortgages.co.uk

  • Helpline – 02920 695 555


  • Private rented sector will continue to grow and is a vital part of housing infrastructure in the U K

  • BTL is good business for Lenders but a specialist area

  • Traditional & new Lenders will emerge into the market

  • More products and special deals will become available

  • Still a good time to be a Landlord



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