Fleet Mortgages CCO on swap rate volatility, EPC reform, and buy-to-let's permanent shift to professional landlords
The buy-to-let market Steve Cox (pictured top) entered nearly eight years ago looks almost unrecognisable today. Limited company structures now account for more than 80% of Fleet Mortgages’ lending, and the tax reforms, regulatory pressure, and landlord professionalisation that drove that shift are, in his view, here to stay.
"Limited company was not particularly a thing more than 10 years ago, it's now the norm," Cox, chief commercial officer at Fleet Mortgages, which has been wholly owned by Starling Bank since 2021, told Mortgage Introducer.
Cox arrived at Fleet from the broker side of the industry, having run his own brokerage before moving into distribution roles at Sesame and PMS, and later setting up distribution at Hodge Bank. That background informs how he thinks about the lender's relationship with intermediaries.
"Being a lender is not actually my DNA," he said. "But if you've got a knowledge of distribution and you've been a broker, the role I do in a lender is made easier because it's just almost like a mirror image of being a broker, for the purposes of products and service and customer outcomes."
The professionalisation of the landlord
Cox's reading of the buy-to-let market over the past eight years is one of structural change driven by regulation and tax. The Section 24 mortgage interest relief changes, additional stamp duty on second properties, and a steady tightening of lending criteria have collectively filtered out what he calls the "amateur landlord".
"The pathway is now set," he said. "It's the professionalisation of landlords, which tends to slant more towards the specialist end of buy-to-let as opposed to those that perhaps only own one property, potentially by accident or for the wrong reasons. I can't see it reversing back to a huge amount of people that will just want to own one buy-to-let. I think those days are gone."
Cox points to growing numbers of landlords diversifying into houses in multiple occupation (HMOs) and multi-unit freehold blocks in pursuit of yield, as well as a geographic spread away from London and the South East towards the Midlands, the north, and university towns. Around a year ago, Fleet removed the requirement for limited company borrowers to use a restricted panel of solicitors – a change Cox describes as overdue.
"As limited company is now the norm, having a restrictive panel of solicitors doesn't work for brokers or customers," he said. "Generally, as landlords become more professional, it's far more likely a landlord will have a mortgage broker, potentially a tax adviser, an accountant, a solicitor, and maybe some builders that will do a refurbishment. They've got that team in place."
Navigating a volatile first half
After a first quarter that encouraged the industry to hope for a "BAU year," geopolitical tensions in the Middle East pushed up swap rates and brought a return of familiar pricing volatility. Cox describes the first half nonetheless as "pretty solid against all the odds," attributing part of that resilience to brokers becoming far more attuned to how swap rate movements translate into fixed-rate pricing.
"We've seen real-time examples where swap rates have moved upwards and we've seen a surge in business even though we haven't withdrawn products, because brokers are anticipating an upward move," he said. "That's a really good thing for customers."
On product withdrawals, Cox is candid about the tension between lenders' commercial needs and brokers' preference for the longest possible notice window. Fleet has settled on around half a day's notice. Not ideal, he acknowledges, but enough to allow a swift return to market. A longer window risks a volume surge a relatively small lender cannot absorb.
"It's like hitting the shaded bit of a Venn diagram, which is difficult," he said.
What does Burnham's arrival mean for buy-to-let landlords?
With Andy Burnham now installed as prime minister, Cox identifies the Warm Homes Plan and energy performance certificate (EPC) requirements as the most consequential policy question outstanding for buy-to-let. The direction of travel – that rental properties will eventually need to meet a minimum EPC rating – is widely understood, but the detail, the timeline, and the exceptions are not. According to the House of Commons Library, the Renters' Rights Act represents the biggest reform to the private rented sector since the late 1980s, with phase one taking effect in May, adding further regulatory pressure on landlords already navigating that uncertain EPC timeline.
"When is that going to become law? I think it's when, not if," Cox said. "Until we know exactly what the exceptions will be, what the spend cap will be, what the rules of the spend cap are, it's very difficult for lenders, brokers and landlords to mobilise."
He sees the EPC transition as a significant opportunity for brokers, who will need to help portfolio landlords navigate both the financing of improvements and decisions about which properties to retain.
The remortgage opportunity and the PRS case
With approximately 4.8 million households in the private rented sector across the UK, Cox is unequivocal that no government can afford to damage it fundamentally.
"It is essential to our UK housing infrastructure," he said. "It's virtually impossible for any government of any political persuasion to destroy the PRS. Where would people live?"
The remortgage pipeline remains the most immediate opportunity for brokers advising buy-to-let clients, Cox argues, alongside the growing availability of product transfers – barely a feature of the market eight years ago – which reflects the broader professionalisation of the landlord segment.
For Fleet, the Starling Bank acquisition has been the foundation of that stability. Being on Starling's balance sheet rather than reliant on capital markets funding has brought a lower cost of funds and the ability to price more competitively, Cox says, alongside the security of a profitable, highly regulated parent that is consistently present in the market.
"We certainly have the security of a profitable, highly regulated parent," he said. "We have access to more resource than we would have done as old Fleet on our own, and of course that spins into technology in the future."
The priority, he adds, remains consistency over growth at any cost.
"We are solid and stable. We always want to do more. But there are no silly aspirations for 'double it this year, double again, double again'. It's steady as she goes and carry on doing well what you always have done."
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