BTL opportunities continue despite economy, says Together

“We want to help customers achieve their property ambitions,” declares Tanya Elmaz, director of intermediary sales at Together. “We are a lender that wants to listen to customers’ challenges and find the right solutions.

“Together was set up nearly 50 years ago to be different from high street banks. We will never be a tick box or a ‘computer says no’ type of lender, that's just not in our vocabulary. It doesn't mean we lend on everything that comes through the door, but it means that if it's a sensible scenario, or even an unusual, but reasonable scenario, we’ll lend if we can.”

Elmaz continues: “We are very well known for the flexibility of our criteria. So that can include if you are a first-time buyer, a non-UK applicant, if you have credit blips, have got three jobs and the banks are not taking consideration of all that income together, or if you’re an investor wanting to grow your portfolio and you are purchasing your thirtieth buy-to-let – even if it’s a non-standard property. We also lend to different entities, so that can be a limited company or trust. Not all lenders do that.”

Buy-to-let is a key feature of the specialist lender’s product range. Together lends across both the regulated market of personal finance, first and second-charge mortgages and consumer buy-to-let, and also the commercial finance sector, offering commercial mortgages and buy-to-let, specialist buy-to-lets, and bridging loans. The lender’s buy-to-let loan book is worth around £2bn and it transacts approximately £50-60m per month in buy-to-let lending. Less than 10% of this is consumer buy-to-let - lending to so-called accidental or amateur landlords.

Despite an unsettled economy, rising interest rates and soaring inflation, Elmaz is positive about activity within buy-to-let and the wider market – and seemingly pleasantly surprised that the fallout from last September’s momentous mini budget hasn’t been as impactful as the industry initially feared.

“We haven't seen the drop in demand we might have anticipated for people transacting with buy-to-let loans, bridges or commercial mortgages,” she considers. “The market still presents itself with lots of different opportunities. The rise in interest rates hasn't been as high as we first expected, so that's been good. Rents have surprised us and have been continuing to rise, maybe not exactly in line with where mortgage rates are going, but they have been doing better than anybody expected.

“Yes, inflation is still high, we're still getting used to higher energy prices. In one sense, it's a new world that we're getting used to, but it's not a new world for people who have seen interest rates of five or six per cent or higher, years before. This is going back to the old world for them, with a few extra challenges.

“This year is going to be a challenge, as people come off their fixed rates and experience mortgage shock, suddenly paying more in repayments than they can afford from their income, especially given cost-of-living pressures, such as higher energy prices and rising food costs. There’s lots of talk though that by the end of this year, we might begin to see a decrease in interest rates.”

She adds: “We can't deny that there's been a major shift in the buy-to-let market, with those higher rates, a little bit more regulation, tenants feeling stretched and mortgages not as cheap as they were. But there is still demand for buy-to-let out there.”

Legislation

Elmaz acknowledges that legislation around Energy Performance Certificates (EPCs), which means that landlords must achieve a C rating or above for their rental properties by 2025, will deter some owners from staying in the market, but also sees it as part of a trend towards a more professionalised sector.

“EPCs are bringing up the quality of properties and their energy efficiency and, of course, that's good for everybody,” she suggests. “My personal advice to landlords would be to start reviewing your property improvements now, assess the costs and explore how you can arrange finance. It might be a second charge mortgage on your buy-to-let portfolio, it might be a bridging loan. There are tax benefits or efficiencies for being a limited company, so that's also pushing the sector towards being more business focused.

“We are seeing different outcomes with landlords. If you have a big portfolio, you might be looking to review where you have a weak link and remove that. If you're a landlord with one or two properties, you may be looking to exit. Not to revel in anybody's misfortune, but extra properties are coming onto the market where people are struggling, and perhaps putting their properties into auctions. So, that presents opportunities for investors.”

She reasons: “The opportunities lie in being careful with your numbers and understanding and researching what you're getting into. Properties like HMOs (houses in multiple occupation), multi-unit lets, student lets, social housing, where you have multiple tenants in one asset will of course give you a bigger yield.”

Role

Brokers continue to have an important role to play, Elmaz believes.

“Whilst it's not a broker’s job to be an all-round financial adviser, I think there's a role for them to go the extra mile with buy-to-let clients and ask, ‘What would you do if that tenant left, do you have to have a plan B?’ So, it’s about communicating well and keeping an open dialogue,” she advises.

“Brokers need to be very up-to-date with lenders and their criteria. There's no point in relying on just ten lenders that they're comfortable with, they need to know everybody and what they do. They need to ask the right questions of their clients, really understand what their needs are and make sure that they're delivering on those, while ensuring too that they are realistic.”

She reflects: “Our name, Together, does say a lot about the way we work in conjunction with our intermediary partners and in conjunction with our clients. We often use the word partnership, referring to our brokers and clients.”

When it comes to property, Elmaz certainly knows what she’s talking about - both personally and professionally. She’s been a buy-to-let landlord since she was just 20 years-of-age and maintains what she describes as ‘a small portfolio’. She has also been working within the finance industry for several decades.

“I like to touch and feel my investments,” Elmaz laughs. “A lot of people like to have a tangible asset, particularly in the UK. You can flip a property and make money, though it’s not as easy as it once was. So, in my view, be careful about it, crunch the numbers and ideally go into it for the long haul.

“I've read lots of things that say ‘oh, is this the end of buy-to-let?’ Well, I've worked in the industry for 25 years. I think we've all read those headlines before. Yes, there have been tax changes and it is more difficult to make a profit from a standard buy-to-let, but landlords get into it for different reasons.”

Summing up, she shares: “In the 30-odd years that I've had buy-to-let properties, some decades it's brought me a good, additional income, some decades it’s about equitable growth. It's more of a long-term game now and it is something that can support your retirement. I still think property is a good investment.”