Landlords have become accustomed to some constant buffeting over the years, be this through regulatory and legislative change, global events and/or domestic economic headwinds.
These events have led to greater levels of resilience being formed throughout the sector and a lending community which continues to evolve effectively to meet new financing requirements and landlord approaches.
Looking forward, and not too far into the future, there’s no question in my mind that the BTL landscape is set to become even more complex. This is largely due to an increasing number of professional landlords looking to divest and turning their attention towards larger HMOs, mixed-use property and multiple dwellings under one title. Inevitably, such transactions do come with additional legal layering and the need for a more specialist lending approach, but they have the potential to generate stronger yields.
This additional complexity demands extra dynamism, but not every lender has this in their locker. For finance providers that have the foresight, capacity, ability and appetite, it’s all about remaining as agile as possible, while at the same time understanding the longer-term picture and keeping an eye on the opportunities emerging from a landlord community whose needs and demands are constantly shifting. And, importantly, being able to act on them in a competitive and responsible manner.
An increased emphasis on technology will help ensure this pace of change is maintained, but this comes with the caveat that tech should only be deployed to remove pain points within an application that don’t necessarily need human intervention—so providing a platform for underwriters to do what they do best without drowning in unnecessary admin processes.
For lenders who implement a manual underwriting approach, this offers the opportunity to incorporate a more holistic approach when assessing individual cases — one which allows them to support an array of complex landlord demands and reach more flexible and accountable lending decisions now and in the future.
Our experience of 2024 so far suggests that while some landlords are selling properties, this is nothing new — especially for the more professional end of the landlord spectrum as they look to rebalance, shore up, or expand their portfolios in other aforementioned areas.
Such landlords maintain a much longer-term view and while they may be quick to diversify their holdings, this is more with longer-terms gains in mind rather than a quick win. This philosophy is also one shared by lenders who maintain a successful track record within the BTL sector. After all, even if a certain approach is working, there’s no time or room to rest on our laurels, as we have to constantly embrace change where appropriate and where it can make a lasting impression.
