Nouran Moustafa warns mounting pressure on high-street lending is driving advisers towards buy-to-let and complex markets
The residential mortgage market is under siege, and brokers who fail to recognise the structural shifts now bearing down on the sector risk being left behind.
Nouran Moustafa (pictured top), executive financial and mortgage adviser at London-based Roxton Wealth, argues that a convergence of structural forces is rapidly eroding the viability of standard residential lending as a sustainable business model.
"The residential market is going to disappear in the next five years," Moustafa told Mortgage Introducer. "From a broker commercial perspective, if you want to sit in this job, you set your eyes on the complex lending market, start learning the complex lending market, and just get into buy-to-lets and complex lending."
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Three pressures squeezing the residential channel
Moustafa identifies three distinct threats bearing down on residential brokers simultaneously.
The first is direct encroachment by the banks. She points to reported partnerships between major lenders and property portals – including tie-ups involving Lloyds and Rightmove and NatWest and Zoopla – as evidence that banks are actively working to reduce broker involvement in the transaction. Cashback incentives on product transfers are compounding the problem. "A lot of banks now offer cashback for product transfers," she said. "So you are no longer building a book."
The second pressure is consumer expectations she describes as rising to "an illogical level." Clients switching between three or four lenders before completion to save as little as £5 a month are consuming significant adviser time without meaningful financial return – a dynamic that is quietly undermining profitability across the sector.
The third, and perhaps most structurally significant, is artificial intelligence. Moustafa draws a direct line between the growing capability of AI tools to generate convincing documentation and the compliance exposure that creates for brokers. "I can bet that in five years' time maximum, it will be absolutely impossible to spot 100% of the fraud before you submit an application to a lender," she said. "If you go onto ChatGPT right now, you can create a passport, you can create bank statements, you can create payslips."
Mortgage advisers already navigating the demands of Consumer Duty face a particularly asymmetric risk. Banks retain access to data sources – including the voters' roll – that brokers cannot reach, meaning one undetected fraudulent application can result in panel removal regardless of a broker's track record.
The case for buy-to-let and complex lending
Moustafa's own response has been a deliberate pivot. Roxton Wealth will continue to serve its existing wealth management clients with residential mortgages where needed, but the firm's core lending focus is shifting to HMOs, complex lending, and buy-to-let.
She argues the buy-to-let space carries a significantly lower compliance risk profile by comparison. "The maximum risk of fraud you are going to get in a buy-to-let is someone who wants to do a buy-to-let as a backdoor resi, and normally that's quite easy to figure out," she said.
The unregulated nature of buy-to-let also introduces flexibility that the regulated residential market does not allow. Unlike residential lending, which binds advisers to Consumer Duty process requirements, the buy-to-let market allows her to work in the way each individual client prefers – some want granular detail on every aspect of a deal, others care primarily about costs.
Moustafa is also clear-eyed about the opportunity landlords now represent. Despite sustained government pressure on the buy-to-let sector, demand for skilled advisers is rising sharply. "Right now, landlords are in need for proper brokers like never before," she said.
UK landlords facing stamp duty changes and tightening regulation are increasingly seeking specialist guidance to navigate what has become a complex environment. Holiday lets and short-term rental models are another growth area Moustafa anticipates expanding, particularly as policy shifts continue to reshape the longer-term lettings market.
Lender relationships are non-negotiable
Brokers considering the move into complex or buy-to-let lending will need to leave high-street habits behind, Moustafa warns. "In a residential market, you don't need to discuss each and every deal," she said. In complex lending, the opposite is true. HMO deals and semi-commercial transactions require pre-placement conversations with lenders, not least because off-high-street lenders routinely charge application and valuation fees that cannot be recovered if a deal falls through.
"If you just go place the deal, probably the deal is not going to go through," she said. "You can't really go try your luck."
Her core advice is to invest time in building relationships with business development managers before placing a single case. She suggests a minimum of 30 to 40 diverse deals before a broker can claim genuine competency, and warns that treating complex lending like residential will lead nowhere. "If you treat it like residential, you got a case, you went and you placed the case, you are absolutely not getting anywhere," she said.
Moustafa is also watching the semi-commercial market closely. Semi-commercial lending is approaching £1 billion in annual volumes for the first time, with growth driven in part by the appeal of cooperative tenancy agreements and the comparative cost advantage of converting semi-commercial property to residential use under the current stamp duty regime. Lender appetite in the space is high risk but high return, she notes.
The window is still open – but not for long
The urgency in Moustafa's message is aimed squarely at younger advisers. A broker nearing retirement may reasonably see out their career in residential lending, but the calculation looks very different for anyone with decades still ahead of them. The complex lending market is growing, the relationships are there to be built, and the window to get ahead of the shift is still open.
"I think any broker in their 20s, 30s, 40s or even 50s, they should be looking at the complex lending market," she said. "It's the right time to come in now. You still have the time to learn, and you can build up your relationships."
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