A leading industry peer has revealed that he believes gross buy-to-let mortgage lending is likely to fall in the next two years.
However, David Whittaker, of Mortgages for Business, feels the share of lending through limited companies should increase.
Reduction
Speaking at yesterday’s FSE Manchester event, Mr Whittaker said that 2017 would see a reduction in the £40bn worth of buy-to-let lending completed during 2016.
He predicted that this would also slip further in 2018.
In addition, he forecasted that 8/9% of this lending would be for limited company buy-to-let in 2017- with this anticipated to rise to 20% during 2018.
Mr Whittaker highlighted data from two lenders- Keystone and Paragon- which both indicate an increase in buy-to-let purchase applications from limited companies. In fact, Keystone’s data indicates that during Q4 of 2016, 3 in 4 applications were through a limited company.
Industry expert suggests buy-to-let lending will fall
Underwriting Changes
Whittaker has urged both advisers and clients to be ready for the second part of the PRA buy-to-let underwriting changes, which lenders must introduce by the start of October.
‘We will all have to be prepared for much more paperwork,’ Whittaker noted.[1]
There was also a call for an industry debate regarding the appropriate level of reward for advisers, taking into account the increase in work required for buy-to-let transactions.
Mr Whittaker feels that 15% of all vanilla buy-to-let businesses will have moved into the specialist portfolio and complex sectors, where procuration fees are greater.
‘A seismic change is going on and we need a propert debate on this. If they (the lenders) pay us property, they’ll get the work as they want it,’ he stated.[1]
[1] http://www.propertyreporter.co.uk/finance/btl-lending-predicted-to-fall.html