Despite the multi-layered assault on the private rental sector it is still flourishing. Thinking back to the tax changes that have happened, including increases to stamp duty and the reductions to higher rate income tax reliefs, we all thought that these could severely impact both those already in the sector and those looking to enter. When these were augmented by the introduction of new rules surrounding portfolio landlords and the application of new stress rates then borrowing should logically have been curtailed.
Whilst the evidence suggests that some “dinner party” landlords have sold and moved on, it is apparent that yields and returns, despite these changes, remain attractive to long term investors. The UK residential property market is not only stable but providing good longer term capital returns. In addition, with the pressures on the wider market and the continuing difficulty for many to raise a deposit to get on the housing ladder, then renting is the only game in town. Indeed, as the rental sector now holds as much as 25% of the UK housing stock, these properties which are “locked-up” for the long term are reducing the available stock for re-sale, adding pressure to prices and to the drive by government to increase new build.
Whilst the wider impacts of Covid on employment and the economy were expected to dampen demand in the rental sector, rents appear to be stable in many parts of the country and increasing in others. The length of tenancies is also increasing with the average stay in a property now well past two years. All of this is creating a more stable market where good landlords and quality tenants benefit from each other. Good advice and getting the right product from the right lender has never been more important, with landlords more than ever needing good brokers to support their businesses.
The other key role for brokers today is in the area of remortgage and product transfer. It is widely recognised, even in government, that the mortgage sector is positive about ensuring as few consumers as possible default onto SVR. We have a key role to play in ensuring that the simple product transfer is properly compared with the gains to be made from a potential remortgage. Ensuring that all the options available are discussed to deliver the best possible price should be at the heart of discussions. As intermediaries we also should be ensuring that all those we have previously advised take time to listen to the options that are available.
Finally, we need to ensure that we can make the remortgage as easy as possible for the customer, rather than the perceived simplicity of the product transfer. As intermediaries it is our job to bring the two parties together as seamlessly as possible. I remain concerned that there is a reward difference between the two options with many lenders. A proper focus on what is right for the customer, acting in their best interests and keeping processes simple is the best solution.
Robert Sinclair, AMI Chief Executive