Small firms ‘to struggle’ as new entrants thrive

Bob Golden, chairman of Close Mortgages, which has gone live with its buy-to-let proposition, distributed through Mortgage Intelligence, argued a combination of investment in technology and more sophisticated products would help the lender succeed in the market, with the majority of its business coming from building societies.

He said: “You have medium-sized building societies struggling to keep pace as they have the costs of their branch networks and the legacy culture to deal with. I can see building societies losing market share in the next few years, so there will be room for new players such as ourselves.”

Close is offering four buy-to-let products, which it said were drawn up after talking to brokers. It added it would be looking to expand outside of buy-to-let in the future.

The product range divides the different areas of the buy-to-let market into investor and professional landlords and, according to Golden, would represent the diversities of the sector.

He said: “30 years ago, a mortgage was a mortgage. But now the market has salami-sliced itself into niche areas, although buy-to-let is worth £30billion a year, so it’s not so niche. Borrowers are more sophisticated and brokers believe rental cover is often too high, so we came up with a product that reduced the rental cover to 110 per cent and included rental protection.”

Mark Alexander, managing director at The Money Centre, said: “The products seem quite vanilla to me, compared to the likes of Platform, CHL Mortgages and The Mortgage Works. I’m also quite surprised the UK Commercial Funding Group wasn’t consulted. The inclusion of rental protection is something I haven’t seen before but I’d have to see the wording of the policy.”