Could specialist lenders be the mainstream when it comes to Buy-to-Let?
Can the changing landscape of the UK economy result in specialist lenders becoming the mainstream when it comes to the Buy-to-Let market?
The UK property market has recently been impacted by many factors from the increasing BoE interest rates, rise in unemployed, impact of the Russia-Ukraine conflict to the fears of any possible recession. During times of instability when mainstream lenders may be more risk adverse, specialist lenders fill the void by their flexible approach to lending, structure and their relationship with brokers.
Dynamic and Agile
As a Specialist Lender, West One pride themselves on providing greater service levels as a differentiator and key strength. A dynamic approach and ability to manoeuvre quickly in comparison to the High-street lenders, helping to provide tailored solutions, bespoke products, and even offer lending outside of criteria, when addressing larger loans, MUFBs and HMOs.
Arguably ICR and affordability in the last 12 months have been the challenge landlords have faced since the last financial crisis in 2008. West One provide solutions, implementing product innovation with investors in mind allowing them to transact business.
Investor focused & Product innovation:
The Buy-to-Let sector thrives on the success of property investors, more so in 2023, as more-and-more 'smaller' landlords consider selling properties rather than investing.
Savillis highlight a 13% increase in homes in the UK sold by landlords between April and May, compared with the previous two months. The increase self-off should not just be attributed to rate rises. With EPC regulations set to take an effect in 2025, potentially further increasing cost for landlords.
However, West One acknowledges the difficulties by offering financing solutions, from Limited Edition products, 5 years fixes with no ERCs after 3 years, and products with fees providing borrowers with a lower rate over time and offering higher lending amounts.
West One appreciate not one size fits all, understanding the market and how to support borrowers can help investors seek opportunities in today's marketplace.
Opportunities are abound
Despite challenges in the market, there is still clear appetite in the market for property investments, however seen as more long-term projects for landlords.
For those still looking to invest they may consider high yielding areas, types of properties or products which can provide flexibility regarding term length, ERCs and fees.
Properties targeted by landlords may be changing from the 'traditional' house to properties which may offer greater profitability but may not have been considered before due to legal implications or costs.
HMOs and MUFBs can offer greater yields, higher occupancy rates but they may have greater challenges around legal and social aspects.
Initially investing in new builds can be more costly than a similar pre-existing build, however there are benefits of purchasing new build for investors. From lower start of ownership to the proposed EPC regulations having already been met due to requirements met by developers in the build of the property.
West One's experience and familiarity with HMOs and MUFBs for first-time landlords and those more experienced will help finding solutions through their unique approach and experience within specialist finance industry.
Risk vs Reward of Specialist Lending
Without specialist lenders, many of today's society may not be able to purchase properties as investments or even as their next home. When the mainstream is looking for certainty in an uncertain market from borrowers, they may not find it, which is where specialist lenders take the 'risk', and provide borrowing for investment for borrowers. West One are often less risk adverse than their mainstream counterparts, providing borrowers with the rewards of having greater options when it comes to borrowing.
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