Manual Underwriting Call From Professional Landlords

AFS Team·17 April 2019·4 min read
Manual Underwriting Call From Professional Landlords

Manual Underwriting Call From Professional Landlords

More than one in three property investors are calling for buy to let lenders to apply a manual underwriting process aimed at professional landlords, a new survey reveals.

The findings from MT Finance reveal that 42% of property investors say they have struggled over the past year to secure a mainstream buy to let mortgage.

The primary barrier to funding, for 54% of respondents, is affordability with 32% saying they faced age restrictions.

Another 14% of respondents said they had insufficient deposit to obtain a mortgage.

The findings show that 36% of professional landlords say that a manual underwriting process aimed at meeting their needs from a BTL lender would deliver better support. They also call for a relaxing of age restrictions and an increase in LTV thresholds.

Unable to obtain a mainstream BTL mortgage

Around 46% of those who had been unable to obtain a mainstream BTL mortgage had plugged their funding gap using specialist buy to let lending routes such as bridging finance and secured loans.

Now, 58% of professional landlords say that buy to let lenders are not doing enough to support them.

The commercial director at MT Finance, Gareth Lewis, said: "The results from our survey reflect the impact of stress testing and stricter affordability rules from high street lenders.

"Investors say there's a need for a quick, reliable and transparent access to funding."

He added that bridging finance is becoming increasingly attractive to property investors wanting to expand their portfolio and who need to capitalise on an opportunity swiftly.

Stagnant rent growth is challenging landlords

Meanwhile, new tax laws and stagnant rent growth are creating a challenge for landlords, says one property management firm.

Apropos says that growing numbers of investors are feeling the squeeze, with average rent rises in England falling over the last five years from 1.7% to 1.1%.

In Scotland, rents rises fell over the same period from 1.7% to 0.6%. In Wales, the rents rose to 0.8% from 0.5%.

The firm's managing director, David Alexander, said that this fall in rent price increases could not 'come at a worse time'.

He explained: "Many landlords will have found over the last two years that their net income may have halved and over the next two years they will have lower returns. In Scotland, the situation is slightly worse with higher taxation."

He says this pressure on profits may lead to many landlords considering whether to sell up, particularly for those smaller and 'accidental' landlords because the marketplace has 'become more problematic' and it's now 'harder to make money from property'.