Already have an account?
New to Castle Trust?
Information about the company
Customer lending information
Learn about investment options
Our latest news and updates
On 26th September, we launched some major enhancements to our broker portal, including full online case management, secure messages and automatic certification of uploaded documents.
The new upgraded case manager area provides brokers with everything they need to manage all of the business they write with Castle Trust, with instant access to the status of their cases available 24 hours a day, seven days a week. A key feature of this area is an up-to-date listing of any outstanding information required to advance an application, so that brokers can clearly see at a glance how their case is progressing.
Another feature of the enhanced portal is the secure messaging platform, which enables direct communications between brokers and the underwriting team. This system enables brokers to keep all of their case correspondence in one place, making it easier to manage and all messages are time and date stamped and grouped in conversations, just like on a smartphone. In addition to this, there is no longer any requirement for brokers to certify documents that are uploaded onto the portal, as these will be automatically verified using the broker’s unique login details.
Barry Searle, Managing Director of Mortgages at Castle Trust, says:
“These technological enhancements to our broker portal represent a huge step forward in the experience we are able to offer brokers who work with Castle Trust. We offer bespoke loans to match client requirements, and so we understood that we couldn’t settle for an out-of-the-box technology solution. Instead, we worked with a dedicated team of in-house developers to ensure that our technology takes the same tailored approach as our lending. I’m delighted with the outcome, and I’m confident that brokers will be blown away with the experience when they next work with Castle Trust.”
In April 2018 we announced our intention to become a bank. Since then, we have been working closely with both UK regulators, the Prudential Regulation Authority and the Financial Conduct Authority, on our banking licence application. We were recently invited to submit our application, which we did this week.
This is a natural next step in Castle Trust’s journey that started when we were founded in 2012 with a simple mission: to help both investors and borrowers achieve their financial goals. Becoming a bank is an exciting milestone but it won’t change our focus on doing what’s right for our customers. In fact, it means we’ll be able to offer a broader range of products in the future.
This stage of the rigorous application process is expected to take until spring next year. There is nothing existing customers need to do now and we’ll keep customers updated on a regular basis.
Speaking about the application, Martin Bischoff, Chief Executive Officer said:
You can find more information about our banking application on our Q&A page.
If you have just returned home from a holiday overseas, you will know all too well about the impact of the struggling pound. But just as a weak pound has made it more expensive for you to buy dinner or hire a car, it has made UK property far more affordable to potential buyers who are remunerated in other countries.
Expats looking to invest in UK property can benefit from the dual advantage of a stagnant property market stifling prices, and the increased buying power of their money. Here’s a closer look at what a difference a weak pound can actually make to overseas buyers.
On 22 June 2016, the day before the EU referendum, £1 was worth €1.30, according to the currency exchange website xe.com. This means that a property worth £750,000 would have cost an equivalent of €975,000.
On 1 August this year, £1 was worth €1.10, which means that a property worth £750,000 could now cost an equivalent of €850,000. That’s a saving of €125,000.
On 22 June 2016, £1 was worth $1.47, which means that a property worth £750,000 would have cost an equivalent of $1,102,500
On 1 August this year, £1 was worth $1.21, which means that a property worth £750,000 would cost an equivalent of $907,500 – a saving of $195,000 because of the exchange rate.
We work with a number of brokers who have seen a considerable increase in enquiries from UK nationals living abroad who want to take advantage of current exchange rates to invest in property. At a time when the domestic property market is subdued, this increased activity from expat buyers is a welcome boost to business. So, think about how you could make the most of the weak pound to open the door to more expat clients.
There’s been a lot of talk of default rates in recent months, both in the trade press and on LinkedIn. The announcement by FIBA that it would start publishing lenders’ default rates put the spotlight on facility extension charges and the ASTL quickly followed up to confirm that its code of conduct for members was amended in 2017 to ensure that all members applying an alternative higher interest rate, such as the default of a loan, must make it clear and transparent in all of their documentation.
Transparency on default rates is clearly important, but it’s really just the bare minimum that lenders should be doing. Default rates have come to the fore recently, not just because of announcements by trade bodies, but also because, in the current market, properties are taking longer to sell, and more borrowers face the potential need to extend their finance.
If an extension, or refinance, is required it should not come as a surprise to the borrower, the broker or the lender. Most responsible lenders should start a dialogue about potential exit solutions many months before a default rate might be triggered. At Castle Trust, we start engaging with borrowers a full 12 months ahead of the maturity of the loan, and we do not charge default rates. Instead, we will look to work with the borrower to identify whether refinancing their loan might be an appropriate option if they do not expect to exit via sale of the asset.
Much has been spoken about default rates, but if lenders work in the best interests of their borrowers and brokers, they should only ever be a last resort when all other avenues have been exhausted.
Brokers have a role to play too. In an environment when a higher proportion of short-term loans are likely to extend beyond their redemption dates, brokers should consider the way a lender treats its customers at the end of a loan as well as at application when they choose the most suitable lender for their clients. It’s a very competitive lender market and there are plenty of options to place a case with lenders that will not charge clients expensive default rates.
There are many consequences to the ongoing uncertainty caused by the continued Brexit situation – one of which is the rise of the staycation. The current political situation has hit the value of the pound, making it increasingly expensive for holidaymakers to go abroad, which means that more people are looking to take their holidays in the UK.
Visit England says the number of people booking self-catering holidays in England increased from 6.22 million in 2015 to 7.23 million in 2017 – and the value of the pound has fallen significantly since then.
This growing demand, coupled with the popularity of sites like Airbnb, has presented an emerging opportunity for property investors who are looking at alternatives to a traditional buy-to-let investment.
A furnished holiday let is a more involved investment than a standard buy-to-let and investors should be commercially prepared for periods of no occupancy, high turnover and increased costs, all of which make holiday lets much more like a trading business.
An advantage of this, however, is that a furnished holiday let is therefore treated like a business rather than a passive investment when it comes to taxation. For example, investors in a furnished holiday let are able to continue to claim full relief on mortgage interest payments in addition to other benefits that are not afforded to buy-to let investors. They can also claim entrepreneur’s relief when they sell a property, for example, so could pay 10% rather than Capital Gains Tax at 28%. The detail of these tax consideration can be complicated, so it’s important that your clients speak to a specialist tax adviser to get accurate information about their tax liabilities when they are considering an investment in a holiday let.
One area that is not complicated, however, is the potential to generate higher returns. For example, according to Rightmove, it is possible to purchase a 2-bedroom flat in good condition, overlooking the beach in Margate on the Kent coast, for £185,000. Let to tenants on an AST, this type of property could generate around £600 in rental income each month, or £7,200 a year – that’s an annual yield before costs of 3.89%.
A similar type of property could be listed on Airbnb for around £140 per night. Let’s assume that the property is fully occupied in July and August and then let to holidaymakers a further 30 weekends throughout the year – this means that it would accommodate holiday makers for 122 nights in a year. At £140 a night, the property would therefore generate £17,080 in income, which is the equivalent yield of 9.23% before costs.
Holiday lets are not for everyone, but for the right investor, the maths can be quite compelling, particularly in the current environment that is continuing to drive an increasing number of staycation holidaymakers.
There are a range of options available to help landlords invest in properties that deliver a lower yield, including deferring interest or rolling some of it up. But which technique leads to a better outcome for your clients?
First, it is important to understand the difference between both methods:
With a product offering deferred interest, the all-in rate may be quoted at 6.99%, which includes 2% deferred interest and a serviced rate of 4.99%. Interest on the deferred element of the loan is compounded and then added back to the loan for payment of the total balance at redemption.
With a roll-up interest product there are no monthly payments required as interest is rolled up to redemption and, any interest which is capitalised is not subject to a stress test. Rolling up all of the interest can reduce the maximum LTV available and so a blended approach is popular. This is where a loan is structured so that some of the interest is serviced, but the interest on the remainder of the loan is rolled up. When the two are combined, the rates can be aggregated to give one set of loan terms.
Both deferring interest and rolling up interest can provide a solution for landlords to invest in low yielding properties, but which is the better option for your clients? The simple truth is that every case is different and depending on the circumstances one approach may deliver the right cash flow model or be more cost effective for your client.
At first sight, a loan with deferred interest might look like the cheaper option but remember that interest on the deferred element of the loan is compounded and this can result in a higher balance to pay off at redemption than you might expect.
So, when it comes to structuring a deal for your buy to let clients, it is worth taking the time to consider in detail the available options and stacking up the figures to see which provides the best outcome, as the deferred choice may not always be the preferred choice.
Castle Trust has published its latest financial statement, as at 31 March 2019. The full detail of the statement can be found in the updated 'Supplementary Prospectus 19 07 04' document in the Prospectus Documents section of the Investments page, and a downloadable Financial Strength Summary can be found at the bottom of the About Us page.
The summary is as follows:
Castle Trust is a financial organisation that continues to go from strength to strength. We are a provider of investment, mortgage and consumer lending products, employing over 220 people across our executive headquarters in the City of London, and an administration centre in Basingstoke, Hampshire. Launched in October 2012, Castle Trust’s principal shareholder is the leading private equity firm J.C. Flowers & Co., which currently manages circa £6 billion in assets.
As at 31 March 2019, customers had £737 million invested into our Fortress Bonds, a product we launched in July 2014. In the last 12 months alone, interest payments of more than £16 million had been made to customers, with all payments (including capital repayments) being paid to those customers when due. Customer satisfaction was such that approximately 73% of customers reinvested with Castle Trust when their existing investment reached maturity.
As at 30 September 2018, Castle Trust’s total loan book stood at over £656 million. This included £497 million of mortgages secured on UK based, predominantly residential, property with the remainder of the book being unsecured consumer and wholesale lending. The business also had over £163 million of cash and cash equivalents that were held in reserve to meet short term funding requirements.
Bridging lending grew by 15% last year alone, according to member data from Association of Short Term Lenders, and it was driven by increasing demand from borrowers for flexible short-term funding.
How many other sectors of our market have experienced this type of growth in a relatively flat environment? And, if you don’t already advise your clients on bridging finance, what are you waiting for?
Despite the growth in the popularity of bridging finance, some myths still prevail about the sector. So, what’s the truth behind some of the most common bridging myths?
Myth: The main use of bridging finance is to save broken chains
Truth: It is true that this is a use of a bridging loan. Bridging finance is a short-term mortgage secured against property or land that is used to ‘bridge’ the gap, until longer term finance can be arranged, or the underlying security is sold – and so one use is to bridge the gap between property transactions.
But often the purpose of bridging finance is to bridge a criteria gap, providing flexible finance where longer-term lenders are unable to help because the process takes too long, or the security is unmortgageable. Three common examples include auction finance, property refurbishment and development exit loans. Another purpose is to for clients who are looking to release equity for cash flow purposes on a short-term basis, for business use for example.
Bridging finance is available on a first or second charge basis on residential, commercial and semi-commercial property as well as land.
Myth: A bridging loan is a last resort
Truth: Bridging can be a useful tool when other avenues have failed, because it offers speed and flexibility, but these attributes are more commonly harnessed by savvy investors and business owners who recognise the benefits of fast access to flexible finance as a means of leveraging their capital. Bridging finance can also provide the option to roll-up some or all of the interest and this means it can be used to manage cash flow, which opens the door to a lot of other uses, including structuring loans that fit the ICR on buy to let properties.
Myth: Bridging lending is expensive
Truth: Bridging is a tool that enables investors and business owners to leverage their capital and fund investments and, in doing this, it can help to create wealth. For example, a bridging loan to fund a refurbishment project may have a total cost of £50,000 for the borrower but could increase the capital value of the property by £100,000 and so the borrower benefits from a net gain. The thing to remember is that bridging is short-term funding and so can be inefficient when taken over a longer period.
Myth: Bridging lending is complicated
Truth: The bridging landscape may seem unfamiliar at first, but the market has evolved significantly in recent years to become more aligned with other areas of secured lending, with greater transparency and clarity. If you have any questions, about how a product works or what it can offer to your clients, speak to a lender BDM who will be able to help.
The key for any bridging loan is to be clear about the exit strategy. This would usually be via a refinance onto a longer-term product, the sale of the property, or a possible combination of both if additional securities have been offered as part of the loan structure.
In the specialist lending world, it’s easy to see each lender as a standalone provider and finding a lender perfectly matched to your client’s circumstances can be painstaking. But there are ways to make it easier.
On most occasions, it’s a question of finding the right lender and from then onwards it’s a straightforward process. However, there can be times where thinking creatively can help to provide a better option for your clients.
We recently received an enquiry on the refinance of a complex £13m portfolio where the loan was outside of our appetite. With most lenders, the case would have been declined instantly and the broker left to start his search again. Our BDMs however, are used to thinking laterally with cases and helping the broker to find a solution, even if it doesn’t sit with us. As a result, we were able to work together with the broker and another lender to structure the loan in such a way that we could provide the senior element of the funding within our appetite, and the other lender provided the remaining amount, fulfilling the borrower’s full funding requirement.
This example really brought home how having a good relationship with a BDM (and a good BDM!) can mean the difference between helping your client and letting a case go. BDMs see every type of case imaginable and are often able to call upon a precedent to advise on how to build a case. Where they haven’t seen a similar case before, it’s an exciting challenge to find the right approach and achieve the ‘impossible’.
Your BDMs are there to help you when the going gets tough as well as with the straightforward cases. Their experience might be just what you need to help you place your next tricky case.
A growing number of investors are choosing to generate better returns by buying a run-down property and renovating it to achieve a higher re-sale price or increased rental income. Traditionally, property refurbishment falls into two main categories – light refurbishment, where no planning permission and building regulations are required, and heavy refurbishment, which requires planning permission or building regulations.
Light refurbishment could typically include re-wiring a property, or fitting a new bathroom or kitchen, whereas heavy refurbishments are more involved and can include converting a property to residential use, creating multiple units from a single building or converting multiple units to a single building.
Permitted development, however, provides a third option for property investors that is less involved than heavy refurbishment but provides more scope to add value than light refurbishment. As an example, at Castle Trust, we recently launched a bridging product that can be used for refurbishment where building regulations are required but planning permission is not.
This combination provides investors with a wide scope of options, so what type of changes to a property require building regulations but not planning permission?
Building regulations will probably apply for someone who wants to put up a new building, extend or alter an existing one, install washing and sanitary facilities, hot water cylinders, water drainage, replacement windows and fuel burning appliances of any type.
In these circumstances, the work must meet the relevant technical requirements in the building regulations and they must not make any other part of the property less compliant or even dangerous.
When it comes to planning permission, it is always worth checking with the local planning authority to check whether a project falls within permitted development of if planning permission is required. However, as a general rule, the following changes can be made without the need to apply for planning permission:
Nearly all internal works such as loft conversions, garage conversions, new staircases, bathrooms, kitchens, or rewiring, do not require planning permission. But always check if the property is listed or located in a Conservation area.
Extensions are generally considered to be permitted developments, as long as:
Garages, sheds and other outbuildings
Outbuildings such as sheds, garages and greenhouses are also usually considered to be permitted development, provided the building is no higher than 4 metres and outbuildings do not take up more than half of the land around the original property.
So, before you start to search for the right refurbishment loan for your client, make sure you understand the exact nature of the work and the regulations and permissions that are required, as this will influence your choice of product.
The average time taken to sell a property in the South East is approaching six months, according to RICS, which says that properties elsewhere in the country are taking up to five months – and these figures support the anecdotal evidence that the transaction market continues to be stagnant.
This is bad news for developers with completed schemes and we’ve seen a significant increase in the demand for development exit loans to help investors bridge the gap between development finance and a longer-term exit, whether it’s refinancing or selling the asset.
And it’s not just demand for development exit loans that has been increasing, the term of loans sought by developers is also on the rise. With the ongoing political squabbling doing little to create an environment of certainty, developers are adjusting their expectations and taking a more pragmatic approach.
Many have accepted that they may be in this for the long haul and, rather than arranging short-term finance of 12 or 18 months only to potentially have to refinance again at the end of the term, more developers are buying extra time at the outset in the form of three year development exit loans.
Three years is undoubtedly a long time for short-term finance and the risk associated with this more cautious approach is that a developer could find a suitable exit in less time and have to pay a fee to redeem the loan.
This is why, at Castle Trust, our development exit products are available on a three- year term with a two-year ERC, enabling developers to repay the loan without penalty any time after two years if it suits them. The products can even include the flexibility to sell an agreed percentage of the properties during the ERC period, giving the client a product that works on their terms.
We’re not the only lender offering more flexible development exit loans of course, and this area of the market is currently seeing a lot of innovation in response to growing demand.
So, if your developer clients are looking to buy themselves more time, take another look at the options – they may be able to access a more flexible solution than you thought possible.
LinkedIn is a great way of keeping up to date with what is going on at the coalface of the market as brokers will often share their frustrations online long before any trends are picked up by more formal research.
One recent trend I’ve noticed on LinkedIn and feedback from my team of business development managers is the growing number of brokers who are frustrated by lenders pulling out of deals once they have been agreed.
It’s a worrying development that puts brokers in a difficult position and can leave clients frustrated and out of pocket, so how can you guard against being let down by a lender?
In the current environment, the strength and certainty of funding should be amongst the top considerations when you are choosing the right product and lender for your clients.
Your relationship with your BDM is key. A good BDM will answer any questions that you have about the certainty of a lender’s funding and give you the confidence that you need for your client’s deal.
Good BDMs will also keep you informed as the case is progressing. For many BDMs, their work stops at the point of submission but for a good BDM, that’s just the beginning. They’ll help to keep your case progressing and give you advance warning of any hiccups that might be on the horizon, helping you to keep your clients up to date.
The first thing is to ask your BDM whether they rely on a funding line from a third party. Many lenders in the specialist sector rely on third party funding, and this isn’t necessarily a bad thing, but if your lender does, you may want to ask whether the funding line is soon scheduled for renewal. Also check whether the lender has more than one funding line, with different institutions and renewal dates, to ensure continuity of service. At Castle Trust, our loans are funded by Fortress Bonds, investment products available to the public. That means that we are fully in control of our funding line and aren’t beholden to a third party funder.
Another consideration is the commitment of the lender and its backers to the market. A number of new entrants have stepped forward in recent years, which is great for competition, but not every lender will have the same level of commitment from their shareholder and, if the going gets tough, there is a chance that some might take a step back.
Also consider the lender’s experience of lending throughout different economic cycles. This applies to both the company and the individuals within the organisation. Lending in a stable environment is easy. The art is in continuing to provide consistent lending decisions when the landscape becomes more challenging. Our team have weathered the storms of many economic cycles and are well equipped to provide consistency regardless of the current environment.
Certainty of funding is a key consideration in the current market and it’s a growing concern amongst brokers. Make sure that you ask your BDM the right questions, so that you can proceed with confidence.
Large loans can be extremely lucrative for brokers. On a loan of £5 million, for example, a proc fee of 1.5% would deliver an income of £75,000 for just one case.
But while they present significant opportunity, they also pose a greater risk of falling through than more standard transactions. Some lenders can be more conservative when it comes to the concentrated risk of a large loan and, by nature, these types of enquiries are often quite complex.
So, if you have a client who wants to borrow a large loan, you need to make sure you are doing all you can to facilitate a successful completion. Letting a large loan slip through your fingertips because you chose the wrong lender can prove costly for your client and very frustrating for you.
With this in mind, what qualities should you look for in a lender? Here are three questions you should be asking your lender before attempting to place any large loan:
1. What is your decision-making process for large loans?
The problem many lenders have with large loans is that they have a hierarchical decision-making process. So, while they may be confident about a case at DIP when it is agreed with a junior mandate holder, the progression of the case through the hierarchy can be fraught with indecision.
Often, it can be the case that the questions asked throughout this process do not enhance the credit decision but are necessary for the higher mandate holder to justify their position, and it all takes time.
There are many lenders that claim to be able to underwrite large complex cases in a timely manner, but still have to put large loans through this cumbersome, multi-stage process.
So, look for a lender that doesn’t just claim to be able to specialise in large loans, but is able to prove its commitment with a dedicated process for making large loan decisions. A hierarchical approach is rarely fit for purpose in this market, so opt for a lender with a flat decision-making structure and a daily focus on progressing complex cases.
2. Do you have experience of successful large loan completions?
Ask to see the lender’s credentials. How many large loans have they completed and how long did they take? More importantly perhaps, try to find out how many large loans they have declined once the application process has started.
At Castle Trust, we recently completed a £12m loan in just 11 working days and were handed a tight deadline because the client had been let down by another lender and was left incurring penalties on an overdue development loan. Because of the situation, the valuation and some of the legal work had already been carried out, but it was a very complex loan, secured across multiple properties and the size of the deal required sign off at board level. But our efficient large loans process ensured we were able to secure a near-immediate decision and complete on the deal in just two weeks.
3. How do you secure your funding?
Certainty of funding is always a key consideration, but it is particularly important on large loans, where lenders with fragile funding lines can be easily spooked. So, ask about a lender’s funding, whether they lend their own funds or rely on funding lines from external institutions and, if so, how many funding lines do they have and when are they up for renewal?
If your lender lets you down because it is unable to fund a deal, your relationship with your client is likely to be damaged, so do your homework and make sure you can be confident that your client’s application is in safe hands.
Castle Trust has launched a new Bridging Loan with streamlined requirements for brokers who want a combination of transparent pricing, fast-track service and flexible underwriting.
Available for a flat rate of 0.67%pm, Castle Trust’s new Bridging Loan can be used for first charge Buy to Let cases up to £1 million. The product has a choice of a nine or twelve month term, with an ERC period of three months.
The loan can be used for all types of refurbishment that do not require planning permission, including refurbishments that do include building regulations.
Brokers will benefit from a streamlined application process, with online submissions and quick illustrations from a dedicated team of bridging specialists who are focused on progressing cases through to completion as fast as possible.
Marcus Dussard, Director of Sales for Mortgages at Castle Trust, said: “At Castle Trust, we’ve developed a reputation for providing brokers with creative solutions for complex cases but, as the demand for short-term finance has grown, we’ve recognised that an increasing number of brokers are looking for more straightforward bridging loans for their clients, particularly on refurbishment projects, which are becoming more popular. So, we have developed a new product and service proposition that gives them just that – a quick, uncomplicated loan with simple pricing, supported by expert underwriters who understand the market. Our new Bridging Loan combines the insight and experience we have developed over the years with a new, more accessible format. It’s a combination we think will prove very popular for brokers and their clients.”
This presents a challenge for brokers. Not only do you have to help your clients to navigate the changing environment and make the right decisions for their circumstances, but you also need to choose lenders that you can be sure will remain committed to the market throughout the uncertainty and be able to fulfil on their agreements.
For those lenders in this market that are not banks, the strength of funding lines is critical and could make the difference between a straightforward completion and a very disappointed client.
So, once you find a lender that can deliver the solution your client wants, how can you have confidence the deal will complete, even if the economic conditions take a turn for the worse?
Here are three questions you should be asking every non-bank lender before you submit an application on behalf of your client:
Castle Trust Capital plc is pleased to announce the appointment of Ronnie Denholm as Managing Director of Omni Capital Retail Finance, its point of sale finance division.
Following the acquisition of Omni Capital Retail Finance in 2016, Castle Trust has restructured the operations of the business and has ambitious plans for progress.
Ronnie is an experienced financial services leader and joins the business from Barclays Bank Plc, where he held various Managing Director roles across the business, including most recently Barclays Partner Finance, one of the UK’s largest point of sale finance companies. Prior to joining Barclays, Ronnie held several senior leadership roles across the American Express group, with a strong growth record across each of the business areas he led.
Martin Bischoff, Chief Executive Officer of the Castle Trust Group said: “Opportunities to work with someone of Ronnie’s calibre are rare, so we are privileged to have him on board. As he’s demonstrated in the past, he is a very capable pair of hands to lead the business as it looks to grow. We have big ambitions for Omni Capital Retail Finance, which Ronnie is integral to helping us achieve.”
Speaking of his appointment, Ronnie said: “I am delighted to join Omni Capital Retail Finance. The company has undergone a lot of changes recently and the prospect of leading the next phase of the company’s growth is an exciting challenge. I look forward to working together with the team to consolidate the business’ position within the market and expand its operations further. “
Not all landlords are obsessed by yield. If they were, there would be very few private rental properties available in London and an oversupply of HMOs in student towns around the country. For some landlords, purchasing a desirable asset in a sought-after location is a more important factor of their investment than achieving a high yield.
For example, according to Which?, the NG1 postcode in Nottingham provides the best buy to let yields in the country, with an average yield of 11.99% and an average house price of £152,631. In Hampstead on the other hand, where the average house price is more than £1.6m, the average yield is just 4.20%. But this is still a popular area for investors because the location will always attract a good level of demand.
The trouble with investing in properties that deliver a low yield is that it can be difficult to make the interest coverage ratio (ICR) stack up on a standard buy to let mortgage.
One option to tackle ICR on low yielding properties is to roll up some or all of the interest. With a roll-up mortgage there are no monthly payments required as interest is rolled up to redemption and, any interest which is capitalised is not subject to a stress test, and so this can increase the client's borrowing capacity.
Rolling up all of the interest on a loan can ultimately reduce the amount an investor is able to borrow however, as the payment of rolled up interest will need to be factored into the maximum LTV.
So, for landlords with low rental yields, a blended product can be the ideal solution. This is effectively a loan that is structured so that some of the interest is serviced, but the interest on the remainder of the loan is rolled up. Because there are no monthly payments due on the rolled-up part of the loan, this element is not subject to a stress test. So, with a balance of serviced interest and rolled-up interest, it is possible to build a loan that fits the required stress test.
The roll-up element offers the opportunity for a client to maximise their loan amount and the serviced element offers a lower rate than the roll-up element. When the two are combined, the rates can be aggregated to give one set of loan terms, keeping things simple for you and your client.
So, if you have clients who choose to invest for long-term stability rather than yield, and need a flexible solution to tackle ICR, consider whether it would be appropriate for them to roll up some or all of the interest on the loan to achieve their lending objective.
As originally published in Financial Reporter.
The ongoing uncertainty around the UK’s departure from the European Union is continuing to have a dampening effect on the property market, which is bad news for developers who might be struggling to sell properties or suffering from down valuations.
The headline of the RICS December market survey was “housing market on hold for now” and the report said that the sales outlook for the next three months is the gloomiest it has been for 20 years.
RICS said that activity indicators from surveyors continued to slip in December with sales volumes dwindling and a net balance of -28% representing the poorest reading since the series was formed in 1999. However, the 12-month outlook is a little more upbeat, which suggests that some of the near-term pessimism is directly linked to Brexit and, while there is no guarantee of greater clarity any time soon, there are indications that the property market could experience an uplift, when we enter a more stable political environment.
So what options do developers have in the short-term if they have deadlines to pay off development finance but are also struggling to shift units at a desirable price?
In this situation, a development exit loan could provide the breathing space they need to transition from a development at their own pace. It’s important to allow a reasonable timeframe to market and sell the properties and, at Castle Trust, our development exit products are available on a three-year term with a two-year ERC. There is also the flexibility to sell an agreed percentage of the properties during this ERC period without penalty, giving the client a product that works on their terms.
So, don’t let your developer clients be suffocated by a stagnant property market. Consider their options with a development exit loan that can provide them with the flexibility and breathing space they need to successfully exit their current development and move onto their next project.
As originally published in Mortgage Solutions.
More than 400,000 first year students will begin university in September and 80% of those students will start looking for their accommodation by March, according to research by the consumer watchdog, Which?.
So, if your clients want to invest in student accommodation, now is the time they should be looking for the right property to ensure they are not too late to meet the demand from September’s starters.
University hotspots are lucrative for landlords, with locations in areas with a high student population like Nottingham, Liverpool, Manchester, Leeds and the North East boasting some of the UK’s highest rental yields, according to Totally Money, which puts Nottingham at the top of the list with average yields of 11.99%.
High yield doesn’t have to mean low quality and the standard of student accommodation has been shifting steadily upmarket, according to research by student housing charity Unipol and the National Union of Students. The survey found that average price of student accommodation in the UK has jumped by nearly a third in the last six years, with the average rental bill now taking up 73% of the maximum student loan, compared to 58% in 2012.
This is partly caused by an increase at the top end of the market, with studio flats now accounting for 9% of student accommodation, up from just 4% six years ago. In fact, self-catered en-suite accommodation now accounts for the lion's share of student accommodation with 58% of total rooms and only 17% of students live in traditional HMOs with shared bathrooms and kitchens.
The report says that private sector investment now provides half of all student bed spaces, up from 39% in 2012, as a growing number of landlords have identified the opportunity in the sector. Lenders have responded to meet this demand and there is now a range of flexible options to fund investment in a variety of student accommodation, from traditional HMOs to purpose built blocks.
September may seem a long way in the future, but opportunity knocks now for investors in student accommodation.
As originally published in Bridging and Commercial
If there is any sector of the lending market that is used to adapting to change, it’s buy to let. As we step into the political uncertainty of 2019 it’s worth looking back over the significant changes the buy to let market has already negotiated in recent years, to give a clue to the trends we might expect over the next 12 months.
Over the last four years buy to let has experienced an unprecedented level of regulation and tax intervention. In 2015 it was announced that the Income Tax relief landlords are able to claim on residential property finance costs would be replaced by a basic rate relief tax reduction, with a phased introduction starting in 2017. Then in April 2016, HMRC added to the tax burden with the introduction of a 3% Stamp Duty Land Tax (SDLT) surcharge for purchases of rental property and second homes.
In January 2017 extra regulation was layered upon these tax changes, with the PRA introducing new underwriting standards for buy to let mortgage contracts, including stricter rules on the affordability tests to be used as part of the assessment of a buy to let mortgage application. This was followed later in the year by the second part of the PRA’s new underwriting standards with the launch of additional checks for portfolio landlords, owning four or mortgage mortgaged buy to let properties.
More recently we have seen new minimum energy efficiency standards for privately rented property, the extension of mandatory licensing for HMOs and the introduction of a minimum bedroom size for HMOs.
It’s been a significant amount to deal with over a short period but, despite some negative speculation, buy to let has survived. Some landlords have decided to step away from the market and we have seen changes to the dynamics of the sector, but the majority of investors remain committed, demand for rental property remains strong and so does buy to let.
Recent figures from UK Finance show that buy to let lending in the 12 months up to October 2018 was £35.4bn, which was actually £0.4bn more than the previous 12 months.
Remortgage activity has dominated this lending and there has been a growing proportion of limited company buy to let as landlords have looked for a tax efficient vehicle for their investment. We’ve also seen increasing demand for less standard types of property investment that can deliver higher yields, such as HMOs, holiday lets, multi-unit blocks and refurbishment projects.
So, what can we expect over the next 12 months?
For the first time in a number of years buy to let landlords can look forward to a period without intervention and so amongst the political instability, there is at least a clear outlook for property investors. The market has demonstrated its resilience and landlords have developed an appetite to take a more creative approach to their investment.
Even if the macro-economic environment dampens the property market, demand for rental property will remain strong and this combined with a proven resilience and more committed and creative investors, should help to make it an exciting 12 months for buy to let.
As originally published in Financial Reporter.
Top slicing has become a popular way for affluent buy to let landlords to invest in property where the yield does not support the rental coverage. But it’s not the only way for sophisticated investors to purchase high value buy to let property.
Blended rates offer an alternative to top slicing, allowing investors the flexibility to service a portion of their loan, whilst rolling up the interest on the rest, enabling you to structure a solution that fits the required rental coverage. Here's an example of how it works.
We recently worked with a broker to help a landlord client with a portfolio of three properties valued at £1,050,000. The client wanted to consolidate his existing borrowing into one loan, with a view to selling his portfolio in three years. He also wanted to ensure that the monthly repayments would be no more than £3,500 per month.
The problem was that the rental income alone would not support the full servicing of the loan, so the client was struggling to achieve his required loan amount without having to subsidise it from his personal income.
To provide a solution, we created a blended rate product for the client, with part of the interest serviced and the remainder of the loan on rolled-up interest.
£597,127 was offered on a serviced basis with an interest rate of 6.99%. The remaining £135,180 required was offered on a rolled-up basis at 8.59%. The two rates were combined to give an overall blended interest rate of 7.29%.
The result was that the client was able to achieve his desired loan amount and continue with his plan to sell the portfolio in the next three years, using the proceeds of sale to fund the rolled-up interest without having to use his personal income.
So, if you have affluent clients who want to invest in high value, low yielding buy to let property, consider a blended alternative to traditional top-slicing.
What age group do you think about when you consider Generation Rent?
Perhaps surprisingly, one of the fastest growing areas of tenant demand is amongst people over the age of 60. According to a report by the Centre for Ageing Better (CfAB), the number of over-60s renting privately has increased by 200,000 in the last four years. And the CfAB predicts that about a third of people over 60 could enter the private rental sector by 2040 as a growing number of older homeowners choose to sell up and rent in retirement.
This trend could have a significant impact on the target tenants for your landlord clients and it could present an opportunity for you. The primary factor impacting the success of a buy-to-let investment is the right property pitched to the right tenants in the right area. A shift in the demographic make-up of the tenant population could drive growth in new areas and on new types of property that have previously proven unpopular amongst buy-to-let investors.
A landlord targeting older tenants may, for example, may consider purchasing a bungalow in a rural location, which would otherwise prove an unlikely choice of investment if they were targeting young professionals.
Another element to consider is the styling and finish of the property. Older tenants may choose to sell their home to downsize but having established a level of wealth and comfort throughout their working life, they won’t want to sacrifice the quality of their accommodation. Renovating run-down properties could provide landlords with an opportunity to deliver the high standards their potential tenants are expecting and could provide you with an opportunity to finance those renovations.
The most straight-forward approach to property refurbishment is light refurbishment, which doesn’t require planning permission or building regulations and so avoids some of the risks of more speculative property development. Light refurbishment renovations commonly include new bathroom, new kitchen, redecoration, rewiring, or new windows and a newly renovated property can increase the capital and rental value.
A refurbished property could help landlords to attract this new generation of tenants, and a fresh look at the idea of Generation Rent could help you to boost your buy-to-let business.
As originally published in Bridging and Commercial.
The recent legislation changes for HMOs have triggered a wave of coverage about the higher yields that can be earned with a multiple occupancy property investment over standard buy to let. But HMOs aren’t the only choice for this type of investment and a multi-unit freehold block is another option that can deliver similar returns.
A multi-unit block differs from an HMO in that it contains separate, independent residential units, each with their own AST agreement. Each household will have its own entrance and private areas into which no one else has right of access, and there are also likely to be common parts, such as a hallway or garden, that all households have the right to use. Examples of multi-unit blocks include:
Multiple-unit flats are lucrative for investors because they provide economies of scale and so, by their nature, they tend to be larger deals. They also provide opportunity for investors to realise greater capital gains as they can increase the value of each unit by separating the title and selling them off individually.
According to the Mortgages for Business Buy to Let Mortgage Index, multi-unit blocks delivered the biggest uplift in yield this quarter compared to any other category of investment.
The average yield achieved by a multi-unit block in Q3 of this year was 8.4%, compared to 7.5% in Q2. The yields achieved by HMOs remained consistent at 8.6% in Q2 and Q3. The yield on a vanilla buy to let during this period was just 5.4%.
We recently worked with a broker to help a 61-year old self-employed director who had successfully developed two adjacent four-bedroom detached houses on a plot of land in Oxfordshire. Both properties were listed on the same title and both were tenanted. The total value of the houses was £1.73 million.
The client wanted to raise £1.07 million to clear the development loan, pay off existing debts and fund a new project. We structured a solution to meet the client's requirements, with a product that allowed him to roll up some of the interest and service the remainder.
Many lenders are able to lend on multiple units on a single title but there are often more restrictions imposed when this is the case. For example, some lenders will not lend on new build properties and some may apply a stricter rental calculation. There are also often limits on the number of units held on the single title. So, look for a lender that takes a flexible and commercial approach, reviewing each application on its own merits and delivering bespoke solutions to meet the needs of the individual customer.
As originally published in Financial Reporter.
Your Buy to Let clients will soon start to feel the financial impact of recent tax changes, as they submit their tax returns for 2017-2018 and this could trigger a conversation about how they can maximise the returns on their investment to counter the extra cost.
One way many landlords choose to increase their returns is buying a run-down property and renovating it to achieve a higher re-sale price or retaining the property and benefitting from increased rental income.
For first time investors in property refurbishment, the most straight forward approach is light refurbishment that doesn’t require planning permission or building regulations and so avoids some of the risks of more speculative property development. Light refurbishment renovations commonly include new bathroom, new kitchen, redecoration, rewiring, or new windows and a newly renovated property can increase the capital and rental value. A refurbished property can also help landlords to attract higher quality tenants and reduce long-term maintenance costs.
Often, the properties that provide the best opportunity for refurbishment, even light refurbishment, are in a condition that makes them effectively unmortgageable, and there is a growing number of lenders that offer flexible short-term lending options to fund property renovation.
A common concern amongst landlords investing in property refurbishment is whether they will be able to refinance to a longer-term solution at the end of their refurb loan. But some lenders are able to offer both the short-term finance and a longer-term solution once the renovations have been completed.
This can provide your clients with the peace of mind in knowing that they have fully prepared their finance at the outset, which can benefit experienced refurb landlords as well as first-time investors.
As originally published in Mortgage Solutions
The number of students studying at UK higher education institutions is now more than 2.3 million and this presents a significant opportunity for landlords who want to invest in HMO property.
There are a number of benefits to investing in student lets. For the right properties in the right area, there is almost guaranteed demand year after year and student lets are often arranged early – up to six months in advance – which can minimise the risk of void periods.
The average yields on HMOs are also currently higher than any other property investment. According to the Mortgages for Business Buy to Let Mortgage Index, in Q2 of this year, HMOs delivered an average yield of 8.6%, compared to a yield of just 5.5% on standard Buy to Let property, while multi-unit freehold blocks delivered an average yield of 7.5% and the average yield on semi-commercial property investments was 7.8%.
For these reasons, we often work with brokers whose clients have children who are going to university and want to invest in an HMO that can be used by their children and rented to other students to cover the costs.
This is a very practical idea, but it does carry some complications. Letting a property to a relative is considered as regulated Buy to Let and this can restrict the number of options. However, most lender definitions state that Buy to Let mortgages are considered to be regulated if at least 40% of the property is used by a family member. So, if your client were to buy an HMO in which their child was to occupy one bedroom out of, say, five on a separate tenancy agreement to the other occupants, then it would not qualify as a regulated Buy to Let contract and you would have more options.
In these circumstances, you should ensure that the rental income achieved by letting rooms to non-family members is sufficient to cover the stress test as this will provide the lender with comfort that the investment is sustainable. However, in most cases, this is unlikely to prove a problem as the yield achieved on HMOs means that there should usually be excess rental income to cover the stress test.
If you are working with clients who would like to invest in student property that will be occupied by a family member, speak to a lender that specialises in HMO investments and can help you to structure the right deal to best meet their requirements.
The uncertainty surrounding the outcome of Brexit negotiations has, temporarily at least, put the brakes on an already faltering property market and transaction activity is suffering.
The September 2018 RICS UK Residential Market Survey has shown a continued weakening in national new buyer demand, citing a mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises.
RICS says that new buyer demand was down by 11% in September on the same month last year and, at the same time, new sales instructions have also deteriorated, leaving average stock levels on estate agents’ books close to record low levels.
The combined effect of constraint on both supply and demand has resulted in house price resilience, but with little fluidity in the market, properties are taking longer to sell. According to RICS, the time taken to complete a sale, from initial listing, has increased to approximately 19 weeks, which represents the longest duration since the measure was introduced at the beginning of last year.
For home-movers, this period can be frustrating, but for developers it can also prove very costly and any delay in selling the property and redeeming the development loan can significantly impact the profit they achieve on a scheme.
This provides an opportunity for you, as a stagnant property market leads to increased demand for development exit loans, that can benefit developers in a number of ways.
A development exit loan allows a developer to refinance their completed development at a lower rate than most development finance, while giving them more time to achieve the best sales price and even release equity from the scheme to use towards future projects.
When it comes to development exit loans, flexibility is key, particularly if your client is actively marketing their development for sale. A loan with a lower rate may ultimately prove more expensive for your client if it also comes with restrictive early repayment charges.
A stagnant property market doesn’t have to put the brakes on your business and there are always options to deliver your clients appropriate solutions, whatever the stage of the economic cycle. In the current environment, development exit loans provide a great opportunity for you to provide your clients with the flexibility they need to bridge the current uncertainty and continue to grow their portfolio.
Castle Trust announces two further management changes.
Barry Searle, the company’s current Chief Operating Officer will become the company’s new Managing Director (Mortgages). Barry has been with Castle Trust since 2014, he has been instrumental in the growth of the company, especially within the mortgage division. He held the largest underwriting mandate and had overall responsibility for operations. During Barry’s financial services career he has held senior roles at various institutions including Legal and General’s mortgage division and GMAC RFC.
Stuart Sykes will be joining the company as Operations Director from MyJar, where he has been Group Customer Operations Director for the last four years. He has previously held roles at ICICI Bank, RBS and Lloyds Banking Group.
Speaking of the appointments, Martin Bischoff, Chief Executive Officer said:
“As the company’s COO, Barry is already very familiar with both the industry and the aims of the business and was a natural choice to fill the role. He has contributed enormously to the success of the business so far and will be a pivotal part of our transition to become a bank.
“Stuart has extensive experience in the lending environment, particularly in consumer finance. We are delighted that he has chosen to join us as we move into Castle Trust’s next phase.”
Castle Trust has appointed Steve Gregory to become its new Telephone Business Development Manager for the Midlands.
Steve, who was previously a Business Development Executive at Castle Trust, will work with brokers across the region to help identify appropriate solutions for their High Net Worth clients, buy to let investors and entrepreneurs in need of business funding.
In addition to this appointment, Castle Trust is further strengthening its sales team with the recruitment of new Business Development Executives.
Marcus Dussard, Sales Director at Castle Trust, said: “Steve has worked at Castle Trust for two years now and developed a strong reputation amongst brokers as someone they can call if they are struggling with a complex case. He has a great understanding of our proposition and the challenges faced by brokers, and this makes him a huge asset to have on the team. In addition to the appointment of Steve, we are further strengthening our support for brokers and recruiting for new Business Development Executives.”
Steve Gregory, Telephone BDM for the Midlands, at Castle Trust, said: “Castle Trust has a unique offering for brokers in that we can genuinely structure bespoke loans to help their clients fund a property investment or business venture. I am looking forward to the opportunity to work more closely with our intermediaries in the Midlands to help identify the best solutions for their clients.”
This was a 54% increase on 2016 and, so far, this year the number of listed properties has already exceeded 197,000, according to Airdna, a useful website that drills into the data of every Airbnb listing in the world.
Airbnb is just one marketing platform, but it’s clear that an increasing number of investors are turning to shorter lets as a way of generating better returns.
For example, a new two-bedroom flat in Canada Water, south London, would typically be available to rent for around £1,800 a month on an assured shorthold tenancy (AST) which means that, at full occupancy, it could generate £21,600 in revenue over the course of a year.
A similar property in the same area could achieve around £150 a night by being let on a short-term basis. Assuming a 70% occupancy rate – which is the London average according to Airdna – that property could generate £38,325 over the course of the year, which is a 77% increase on the amount it could achieve on a standard AST.
It is important to note that this figure is before expenses and that the costs of running a short-term let are considerably higher than a standard buy-to-let given that the high turnover of occupants means larger cleaning, maintenance and marketing fees. But, even accounting for these, the comparable returns on a short-term let are still impressive.
With so many investors drawn to these returns, you need to ensure that your clients have the appropriate product for the way they intend to let the property, as short-term lets and standard buy-to-let are two distinct categories.
The PRA’s supervisory statement on underwriting standards in buy-to-let states that an agreement to dwell in a property for less than one month is not occupation on the basis of a rental agreement, which means that mortgages for short-term lets are not restricted by the same rules that govern buy-to-let.
Short-term lets also have different tax considerations to buy-to-let as they are treated as a trading business, although stamp duty land tax on both still carries a 3% surcharge.
And, perhaps most importantly, a standard buy-to-let mortgage will generally require that the property is let on an AST, which effectively excludes it from being used for short-term rentals through Airbnb or similar platforms. Borrowers with a standard buy-to-let mortgage who choose to rent their property on short-term lets could, therefore, be in breach of the conditions of their mortgage and, as such, committing fraud.
Needless to say, this is not a position that you want to be in with one of your clients so, with the growing popularity of short-term lets, it is worth taking the time to understand how they intend to rent the property and making sure you recommend a suitable product. Taking a long-term view to short-term lets will protect both you and your client.
This is why areas with cheaper house prices – particularly university towns – are heralded as the next buy-to-let hotspots.
But landlords don’t always focus on yield. Often an investor will want a reliable property in an area with strong and sustained demand that can provide dependable long-term growth. These properties tend to be found in more expensive areas so rarely deliver particularly attractive yields.
According to the latest buy-to-let yield map by Totally Money, Liverpool boasts the highest buy-to-let yield of 11.79%, while there are parts of London that only achieve a yield of 1.5%. Despite this huge gap in the yield that could be achieved, there are still many investors who would rather buy in those areas of London. In fact, in monetary terms, a 1.5% yield in London could still deliver more profit than a 12% yield in Liverpool.
We know there is significant demand from landlords for solutions that help them to buy low-yielding properties because of the number of lenders that have started to offer top slicing, where they use the landlord’s income to supplement the interest coverage ratio (ICR). A lot of big names have recently entered this previously niche market and it goes to show that standard ICRs are not sufficient for the requirements of many landlords.
Top slicing is one way for landlords to purchase low-yielding properties within mandatory minimum stress tests, but it is not the only option.
Another approach is to structure a loan where some of the interest is serviced, but the interest on the remainder of the loan is rolled up. Because there are no monthly payments due on the rolled-up part of the loan, this element is not subject to a stress test. So, with a balance of serviced interest and rolled-up interest, it is possible to build a loan that fits the required stress test. This is something we are able to do at Castle Trust, and here’s an example of how it works.
We worked with a broker to help their client – a portfolio landlord – to buy a desirable three-bedroom maisonette in Fulham for £1,050,000. The client wanted to borrow £755,000, but the rental value was only £2,625 per month and the yield did not support this loan amount. Based on PRA stress testing, the client would only have been able to borrow £395,000 from a traditional lender, or £458,000 if the property was purchased by a limited company. This would mean the landlord would have to evidence up to £2,400 additional monthly income.
As the client was an experienced landlord, we were able to structure a solution by splitting the balance and enabling the client to service interest of £365,000 and roll up the interest on £390,000. This meant the client was able to invest in a sought-after property with robust potential for capital gains even though it delivered a low rental yield.
Top slicing may be flavour of the month with many lenders, but it is not the only way to meet demand from landlords for low-yielding property. With the right lender, you can structure a deal for your client that blends serviced and rolled-up interest to enable them to invest in the property of their choice.
There was a time – just a couple of months ago – when you couldn’t open a newspaper or read a website without being bombarded with scare stories about the impact and fallout of the new data regulation. But now that implementation has been and gone, little seems to have changed, except I receive fewer emails than I used to and we have a slightly smaller marketing database at Castle Trust.
It’s a smaller database, but it’s also a stronger database. We may have lost a number of contacts, but they were the brokers who never really engaged with our marketing messages and were even less likely to engage with our business. Now, following consolidation, we can be sure that even though we are communicating with a smaller group, they are more engaged and we can concentrate more of our energy on working with these more productive brokers.
There seems to be a lot of similarities here with the buy-to-let market. The dual impact of tax changes and regulation have triggered many scare stories about an exodus of landlords from the market and research from the National Landlords Association (NLA) states that up to 380,000 landlords – nearly a fifth of the market – expect to offload properties in the next year.
But, at the moment, this anticipated exodus of landlords isn’t being translated into business volumes. According to UK Finance, there were more buy-to-let mortgages completed – and for greater value – in May this year than the same month a year ago. Conversations with some of our distributors that focus on specialist buy-to-let also indicate that they have never been busier and it seems that more landlords are taking a holistic view of their portfolios and diversifying into properties such as HMOs, multi-unit blocks and holiday lets for the first time.
So, while changes to buy-to-let may lead to some consolidation in the overall number of landlords, those that remain have the appetite to become more engaged with the market and drive more value from their investment. Like GDPR, the focus is on quality over quantity and this is good news for brokers who can add real value by advising committed landlords on a whole set of new strategies to help them to grow and diversify their portfolios.
It can be easy to take comfort in a large portfolio of buy-to-let clients and any reduction to these numbers can be daunting, but consolidation provides you with an opportunity to get closer to those clients that really matter and make sure that you are an integral part of their future plans.
The way that brokers have traditionally placed BTL cases is no longer appropriate for portfolio landlords. Whereas a BTL transaction was previously driven primarily by the rental calculation, now criteria plays a much more significant role in choosing the right solution for your clients.
Lenders have all introduced their own interpretation of the guidelines and have applied stress tests in different ways, with different documentation requirements. This means that a BTL transaction is now a much more involved process and sourcing systems are rarely equipped to provide the full picture.
Brokers who have adapted best to the changes are those who have taken a considered approach to portfolio landlord business – obtaining a portfolio document upfront that details the properties in the portfolio, mortgage and repayment information and rental income.
Taking this upfront approach also presents more imaginative opportunities for raising finance, with a loan secured across multiple properties in the portfolio. Often, for example, a client might want to borrow up to 85% LTV, which is not likely to be possible with current stress test requirements. But, by reviewing the portfolio as a whole, you could identify opportunity to raise finance elsewhere on multiple properties at lower LTVs.
According to last year’s housing white paper, more than four million households rent their home from a private landlord and UK Finance said that while only 7% of landlords own five or more properties, these larger landlords account for nearly 40% of rented dwellings.
This means that there could be 1.6 million rental properties held within portfolios that could be used as security to structure more imaginative solutions for brokers’ landlord clients, providing them with opportunity to access larger loans and greater leverage to grow their portfolios.
PRA regulations have changed the way brokers work with their portfolio landlord clients, putting greater emphasis in developing a more thorough understanding of their investment portfolio and this knowledge gives brokers a great opportunity to identify new ways of meeting their lending requirements.
This website is for authorised intermediaries only. This information has not been approved for use with customers and is not intended for public or customer use. Please confirm that you are an intermediary before accessing information on this website.