In Partnership with
Why buy-to-let remains strong
These are demanding days for the buy-to-let market, as lenders, brokers, and landlords negotiate an uncertain economy. But, as Mortgage Introducer’s roundtable discovers, the sector is in good heart
Louisa Sedgwick
Paragon
Industry experts
Barry Luhmann
United Trust Bank
Marylen Edwards
MT Finance
Matt McCullough
Aldermore
Working in financial services for over 30 years, Sedgwick started her career at Bradford & Bingley, and quickly moved into the intermediary mortgage world, where she has held a number of senior positions. These have included the management of her own company, in which she advised institutions on financial service issues; working as Leeds Building Society’s head of intermediary distribution; and, recently, joining Paragon as its commercial director. Sedgwick says a core aspect of her career has been to understand the needs of intermediaries and to promote innovative products.
Paragon
Louisa Sedgwick
With a wealth of experience in financial services, Luhmann’s entry into mortgages began in a corporate venturing business unit, where he co-founded a specialist mortgage brokerage within Lloyds Bank. When this was sold in 2007, Luhmann took over the product management of Lloyds International lending, with a portfolio of £7b, spread from the Isle of Man to Hong Kong. He moved to BlackRock European Mortgages Strategies in 2014, where the team purchased BTL and lifetime mortgage originations from specialist lenders, funding and securitising these portfolios. He joined United Trust Bank in 2021 to build, launch, and lead the bank’s buy-to-let proposition.
United Trust Bank
Barry Luhmann
Responsible for developing and implementing MT Finance’s buy-to-let proposition and underwriting practices, Edwards has thirty years of experience in the industry. She began her career as a mortgage and commercial manager with Lloyds Bank in 1994, before spending 10 years as a buy-to-let and commercial broker. Since then, she has held several senior roles, including positions at Metro Bank, Axis Bank, and Together. Edwards launched buy-to-let at MT Finance in 2023 and aims to grow the business to be as successful as the company’s established bridging arm. She values the adaptability of the industry, which she believes has made it the successful market it is today.
MT Finance
Marylen Edwards
An experienced financial services professional with a proven track record of success, McCullough brings many years of industry experience to the table and holds a key leadership role within Aldermore’s Intermediary Distribution team. He says his primary focus is on the leadership, management, and development of its field-based relationship manager team, with the goal of supporting the acquisition of quality mortgage business. He is dedicated to contributing to the mortgage division's success in achieving its new business acquisition target. McCullough’s specialties include the mortgage industry, specialist lending, buy-to-let, private rental sector, distribution, digital disruption, strategy, housing policy, relationship management, business development, and coaching.
Aldermore
Matt McCullough
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Vault Plus Mortgage and Finance Consultancy
David Merison
“Just shy of 44% of all PRS properties are at A to C, as far as EPC rating is concerned, and that’s actually higher than owner-occupied, so that’s a
great start”
Louisa Sedgwick,
Paragon
FEW AREAS of the property market will have felt immune to the turmoil of the economy over the past year – and certainly the buy-to-let sector faces as many challenges as any.
Rapidly rising interest rates and soaring inflation, together with the tightening grip of a cost-of-living crisis, have sent jitters through the rental market – for landlords and tenants alike.
With mortgage products hastily withdrawn – and subsequently reintroduced – there’s been much to get brokers and property owners talking. With the added pressure of meeting more stringent Energy Performance Certificate (EPC) regulations, there’s been speculation aplenty that many landlords will sell up and exit the market.
“I think the biggest thing throughout all this is – not just for us as lenders but brokers as well – to be more aware of what’s out there for the clients, whether there are grants available”
Marylen Edwards, MT Finance
“The specialist markets are the ones that are more likely to see the growth, and we certainly are, particularly around those high-yielding property types – the HMOs, MUBs”
Barry Luhmann,
United Trust Bank
“It did highlight which lenders are very nimble from a system perspective and a product perspective,” he said. “We saw the evolution of some new products like higher fees/low rates to help with what is now a challenge, which is the yield versus the ICR [interest coverage ratio] in a lower LTV output.”
Marylen Edwards reflected on how MT finance had been affected, soon after entering the buy-to-let market.
“We had six weeks of really good business, volumes growing, and then obviously September happened,” she reflected. “Thankfully, we didn’t have a legacy back book. So we were able to push forward and honour the pipeline that we’d generated by that point, but it did slow down our 12-month
“The inquiries that we’re seeing day-to-day now are landlords looking to buy the properties already in that state of A to C, so your newer builds, your newer converted. It’s a great move for the market”
Matt McCullough, Aldermore
Luhmann commented, “The specialist markets are the ones that are more likely to see the growth – and we certainly are, particularly around those high-yielding property types like the HMOs, the MUBs. But we're also seeing high demand for our holiday let proposition. I think we are seeing some rent inflation coming through and people’s sentiment changing. Where customers were sort of perhaps sitting on the fence, they’re now starting to trade again and purchase mortgages.”
Edwards added, “I think the specialist lenders are the ones who are resilient, for the landlords anyway. The ones that have the stricter criteria and the lack of, I suppose, a bit of flexibility where the market now needs it are the ones where maybe the clients and brokers are finding it hard to place business.
How big a role would buy-to-let finance play in making privately rented homes more sustainable?
“This is the direction of travel for the market,” answered Luhmann. “The landlord is likely to see higher demand for that property, higher rents, and then possibly higher capital value. So there’s good motivation there for landlords to do this, and clearly it takes money, so the landlord is going to either need the finance or want to take out finance because it's more tax-efficient.”
Sedgwick pointed out, “Interestingly, just shy of 44 per cent of all PRS [private rented sector] properties are at A to C, as far as EPC rating is concerned, and that's actually higher than owner-occupied, so that’s a great start. There are about 2,500 properties that still need some sort of retrofit or upgrade to get them to that A to C EPC rating, so I think as far as lenders are concerned, we need to be really innovative in respect of retrofitting-type products.”
McCullough remarked, “The inquiries that we’re seeing day-to-day now are landlords looking to buy the properties already in
With this in mind, Mortgage Introducer brought together four key industry professionals for a special discussion: Louisa Sedgwick, commercial director of Paragon; Barry Luhmann, head of buy-to-let mortgages at United Trust Bank (UTB); Marylen Edwards, head of lending – BTL at MT Finance; and Matt McCullough, national sales director at Aldermore.
Our panel began by giving their assessment of the buy-to-let market.
“It’s worthwhile highlighting the mini budget,” Sedgwick said. “Everybody decided to look at their products, some of which were removed from the market. Some products stayed in the market. And the impact of that is that not a great deal of business was written at the back end of 2022. And of course, that naturally affects the early part of 2023 in respect to completions.”
Luhman agreed that there had been a temporary drop-off in business.
“By the time we got to January, our volumes were back to where they had been,” he explained. “But I think that’s purely because UTB, like some of the other newer lenders in this market, was on such a high growth curve. And then we’ve powered on from there, and I think the market is now seeing growth.”
McCullough believed the resilience of businesses had been tested in the wake of the mini budget.
“Lenders are coming up with products that may have slightly higher fees but allow the landlords to stress accordingly. And I think it’s just a case of everybody – lenders, brokers and landlords – working together, to get a right balance back. But the growth is definitely there.”
Did Sedgwick share this positivity?
“It’s interesting with the HMO world,” she reflected, “in a cost-of-living crisis, the number of people who are looking to either share – because, of course, bills shared are quite significantly cheaper – or just downsizing [is increasing]. So, I think that, absolutely, MUBS and HMOs are set to grow.”
Luhmann had seen a swing toward high-yield properties.
“If I must pick one area, that's the one we’re seeing huge demand for,” he commented. “Anything that drives the ICR – so, limited company with the lower ICR tax, anything that makes it more tax-efficient. They're all the areas that we're seeing growth in.”
plan. However, since the start of this year, business has just grown.”
McCullough believed the specialist sectors would now see the benefits of business around high-yielding properties like HMOs (houses in multiple occupation) and MUBS (multi-unit blocks).
“There’ll be a lot of transactions in limited company buy-to-let,” he reasoned. “Is that increasing the number of people owning property in the buy-to-let sector? Maybe not. It’s probably just those people who transferred from individual to company on their five-year run-off to make it more tax efficient. But what I would say is it's a great time to be in specialist lending for the buy-to-let sector.”
Read on
Edwards chimed in, “I think HMOs and MUFBs [multi-unit freehold blocks] are the way landlords are looking to maximise their asset to get capital growth – but also, the holiday lets, short-term lets, Airbnbs, [and] serviced apartment facilities are another way in. The landlords can get good capital gain from that, that allows them then to buy more properties. A lot of the big cities and the holiday destinations have lost an awful lot of B&Bs and guest houses just naturally through decline over the years, and that's where these types of properties step in.”
Sedgwick believed remortgaging would be big business.
that state of A to C, so your newer builds, your newer converted. It’s a great move for the market to get the PRS into a really good state of play from a sustainability perspective, because it’s great for a lender as well. I do fear that if we really heavily regulate the sustainability area of buy-to-let, it might leave substandard properties on the market in the future for the owner-occupied space.”
As one of the pioneers of buy-to-let, Paragon has been helping UK landlords to grow their businesses for more than 25 years. Working with its network of key intermediaries, the lender prides itself on an extensive mortgage range so that they can find the right mortgage for their clients, no matter how big or small their portfolios. Paragon’s in-depth knowledge of buy-to-let and the UK’s private rented sector means that it fully understands landlords’ requirements. From simple and straightforward propositions to specialist and complex cases, it has the experience and expertise to meet their needs.
Find out more
A specialist bank and multi-award-winning lender, United Trust Bank offers a range of specialist mortgage products, including first-charge and second-charge residential mortgages and a suite of first-charge mortgages for buy-to-let Investment properties. Its products are designed to accommodate customers whose situations or requirements don’t meet mainstream lenders’ criteria. With what it describes as its flexible, common-sense approach to underwriting, it can often provide mortgages for borrowers, property types, and property locations that mainstream buy-to-let lenders will not consider. It aims to provide outstanding service, and says its broker relationships are key to its ability to deliver value-added funding solutions.
Find out more
MT Finance was set up in 2008, in response to a lack of funding options available from high-street banks following the financial crisis. It was created to fill the need for reliable, flexible, and fast access to funds by establishing itself as a bridging finance lender. Since then, MT Finance has evolved into a multi-award-winning specialist finance lender, and prides itself on helping thousands of borrowers turn their aspirations into achievement through its range of buy-to-let mortgage and bridging loan products. Its commitment remains to support borrowers with fast and fuss-free loan products that are flexible from the outset.
Find out more
“Just shy of 44% of all PRS properties are at A to C, as far as EPC rating is concerned, and that’s actually higher than owner-occupied, so that’s a
great start”
LOUISA SEDGWICK,
PARAGON
“I think the biggest thing throughout all this is – not just for us as lenders but brokers as well – to be more aware of what’s out there for the clients, whether there are grants available”
MARYLEN EDWARDS, MT FINANCE
“The specialist markets are the ones that are more likely to see the growth, and we certainly are, particularly around those high-yielding property types – the HMOs, MUBs”
BARRY LUHMANN,
UNITED TRUST BANK
“The inquiries that we’re seeing day-to-day now are landlords looking to buy the properties already in that state of A to C, so your newer builds, your newer converted. It’s a great move for the market”
MATT MCCULLOUGH, ALDERMORE
In Partnership with
Why buy-to-let remains strong
These are demanding days for the buy-to-let market, as lenders, brokers, and landlords negotiate an uncertain economy. But, as Mortgage Introducer’s roundtable discovers, the sector is in good heart
Read on
Matt McCullough
Aldermore
Marylen Edwards
MT Finance
Barry Luhmann
United Trust Bank
Louisa Sedgwick
Paragon
Industry experts
FEW AREAS of the property market will have felt immune to the turmoil of the economy over the past year – and certainly the buy-to-let sector faces as many challenges as any.
Rapidly rising interest rates and soaring inflation, together with the tightening grip of a cost-of-living crisis, have sent jitters through the rental market – for landlords and tenants alike.
With mortgage products hastily withdrawn – and subsequently reintroduced – there’s been much to get brokers and property owners talking. With the added pressure of meeting more stringent Energy Performance Certificate (EPC) regulations, there’s been speculation aplenty that many landlords will sell up and exit the market.
With this in mind, Mortgage Introducer brought together four key industry professionals for a special discussion: Louisa Sedgwick, commercial director of Paragon; Barry Luhmann, head of buy-to-let mortgages at United Trust Bank (UTB); Marylen Edwards, head of lending – BTL at MT Finance; and Matt McCullough, national sales director at Aldermore.
Our panel began by giving their assessment of the buy-to-let market.
“It’s worthwhile highlighting the mini budget,” Sedgwick said. “Everybody decided to look at their products, some of which were removed from the market. Some products stayed in the market. And the impact of that is that not a great deal of business was written at the back end of 2022. And of course, that naturally affects the early part of 2023 in respect to completions.”
Luhman agreed that there had been a temporary drop-off in business.
“By the time we got to January, our volumes were back to where they had been,” he explained. “But I think that’s purely because UTB, like some of the other newer lenders in this market, was on such a high growth curve. And then we’ve powered on from there, and I think the market is now seeing growth.”
McCullough believed the resilience of businesses had been tested in the wake of the mini budget.
“It did highlight which lenders are very nimble from a system perspective and a product perspective,” he said. “We saw the evolution of some new products like higher fees/low rates to help with what is now a challenge, which is the yield versus the ICR [interest coverage ratio] in a lower LTV output.”
Marylen Edwards reflected on how MT finance had been affected, soon after entering the buy-to-let market.
“We had six weeks of really good business, volumes growing, and then obviously September happened,” she reflected. “Thankfully, we didn’t have a legacy back book. So we were able to push forward and honour the pipeline that we’d generated by that point, but it did slow down our 12-month
plan. However, since the start of this year, business has just grown.”
McCullough believed the specialist sectors would now see the benefits of business around high-yielding properties like HMOs (houses in multiple occupation) and MUBS (multi-unit blocks).
“There’ll be a lot of transactions in limited company buy-to-let,” he reasoned. “Is that increasing the number of people owning property in the buy-to-let sector? Maybe not. It’s probably just those people who transferred from individual to company on their five-year run-off to make it more tax efficient. But what I would say is it’s a great time to be in specialist lending for the buy-to-let sector.”
Luhmann commented, “The specialist markets are the ones that are more likely to see the growth – and we certainly are, particularly around those high-yielding property types like the HMOs, the MUBs. But we’re also seeing high demand for our holiday let proposition. I think we are seeing some rent inflation coming through and people’s sentiment changing. Where customers were sort of perhaps sitting on the fence, they’re now starting to trade again and purchase mortgages.”
Edwards added, “I think the specialist lenders are the ones who are resilient, for the landlords anyway. The ones that have the stricter criteria and the lack of, I suppose, a bit of flexibility where the market now needs it are the ones where maybe the clients and brokers are finding it hard to place business.
“Lenders are coming up with products that may have slightly higher fees but allow the landlords to stress accordingly. And I think it’s just a case of everybody – lenders, brokers and landlords – working together, to get a right balance back. But the growth is definitely there.”
Did Sedgwick share this positivity?
“It’s interesting with the HMO world,” she reflected, “in a cost-of-living crisis, the number of people who are looking to either share – because, of course, bills shared are quite significantly cheaper – or just downsizing [is increasing]. So, I think that, absolutely, MUBS and HMOs are set to grow.”
Luhmann had seen a swing toward high-yield properties.
“If I must pick one area, that’s the one we’re seeing huge demand for,” he commented. “Anything that drives the ICR – so, limited company with the lower ICR tax, anything that makes it more tax-efficient. They're all the areas that we're seeing growth in.”
Edwards chimed in, “I think HMOs and MUFBs [multi-unit freehold blocks] are the way landlords are looking to maximise their asset to get capital growth – but also, the holiday lets, short-term lets, Airbnbs, [and] serviced apartment facilities are another way in. The landlords can get good capital gain from that, that allows them then to buy more properties. A lot of the big cities and the holiday destinations have lost an awful lot of B&Bs and guest houses just naturally through decline over the years, and that's where these types of properties step in.”
Sedgwick believed remortgaging would be big business.
“There are 35,000 buy-to-let properties that are due to be refinanced in some capacity this year, so that’s quite a significant market opportunity,” she remarked. “Last year there were 44,000 new SPVs [special purpose vehicles] set up to support buy-to-let properties. So, again, that’s another growth area, I think, for the market.”
McCullough agreed. “There are thousands upon thousands of SPVs that have been set up for limited-company buy-to-let purposes. The biggest thing is, though, all these run-offs that are happening this year, a lot of them in individual name, will start to transfer to company with the right tax advice. So there’s a big pocket of business there to be had from limited-company lenders.”
How big a role would buy-to-let finance play in making privately rented homes more sustainable?
“This is the direction of travel for the market,” answered Luhmann. “The landlord is likely to see higher demand for that property, higher rents, and then possibly higher capital value. So there’s good motivation there for landlords to do this, and clearly it takes money, so the landlord is going to either need the finance or want to take out finance because it’s more tax-efficient.”
Sedgwick pointed out, “Interestingly, just shy of 44 per cent of all PRS [private rented sector] properties are at A to C,
as far as EPC rating is concerned, and that's actually higher than owner-occupied, so that’s a great start. There are about 2,500 properties that still need some sort of retrofit or upgrade to get them to that A to C EPC rating, so I think as far as lenders are concerned, we need to be really innovative in respect of retrofitting-type products.”
As one of the pioneers of buy-to-let, Paragon has been helping UK landlords to grow their businesses for more than 25 years. Working with its network of key intermediaries, the lender prides itself on an extensive mortgage range so that they can find the right mortgage for their clients, no matter how big or small their portfolios. Paragon’s in-depth knowledge of buy-to-let and the UK’s private rented sector means that it fully understands landlords’ requirements. From simple and straightforward propositions to specialist and complex cases, it has the experience and expertise to meet their needs.
Find out more
A specialist bank and multi-award-winning lender, United Trust Bank offers a range of specialist mortgage products, including first-charge and second-charge residential mortgages and a suite of first-charge mortgages for buy-to-let Investment properties. Its products are designed to accommodate customers whose situations or requirements don’t meet mainstream lenders’ criteria. With what it describes as its flexible, common-sense approach to underwriting, it can often provide mortgages for borrowers, property types, and property locations that mainstream buy-to-let lenders will not consider. It aims to provide outstanding service, and says its broker relationships are key to its ability to deliver value-added funding solutions.
Find out more
MT Finance was set up in 2008, in response to a lack of funding options available from high-street banks following the financial crisis. It was created to fill the need for reliable, flexible, and fast access to funds by establishing itself as a bridging finance lender. Since then, MT Finance has evolved into a multi-award-winning specialist finance lender, and prides itself on helping thousands of borrowers turn their aspirations into achievement through its range of buy-to-let mortgage and bridging loan products. Its commitment remains to support borrowers with fast and fuss-free loan products that are flexible from the outset.
Find out more
Working in financial services for over 30 years, Sedgwick started her career at Bradford & Bingley, and quickly moved into the intermediary mortgage world, where she has held a number of senior positions. These have included the management of her own company, in which she advised institutions on financial service issues; working as Leeds Building Society’s head of intermediary distribution; and, recently, joining Paragon as its commercial director. Sedgwick says a core aspect of her career has been to understand the needs of intermediaries and to promote innovative products.
Paragon
Louisa Sedgwick
With a wealth of experience in financial services, Luhmann’s entry into mortgages began in a corporate venturing business unit, where he co-founded a specialist mortgage brokerage within Lloyds Bank. When this was sold in 2007, Luhmann took over the product management of Lloyds International lending, with a portfolio of £7b, spread from the Isle of Man to Hong Kong. He moved to BlackRock European Mortgages Strategies in 2014, where the team purchased BTL and lifetime mortgage originations from specialist lenders, funding and securitising these portfolios. He joined United Trust Bank in 2021 to build, launch, and lead the bank’s buy-to-let proposition.
United Trust Bank
Barry Luhmann
Responsible for developing and implementing MT Finance’s buy-to-let proposition and underwriting practices, Edwards has thirty years of experience in the industry. She began her career as a mortgage and commercial manager with Lloyds Bank in 1994, before spending 10 years as a buy-to-let and commercial broker. Since then, she has held several senior roles, including positions at Metro Bank, Axis Bank, and Together. Edwards launched buy-to-let at MT Finance in 2023 and aims to grow the business to be as successful as the company’s established bridging arm. She values the adaptability of the industry, which she believes has made it the successful market it is today.
MT Finance
Marylen Edwards
An experienced financial services professional with a proven track record of success, McCullough brings many years of industry experience to the table and holds a key leadership role within Aldermore’s Intermediary Distribution team. He says his primary focus is on the leadership, management, and development of its field-based relationship manager team, with the goal of supporting the acquisition of quality mortgage business. He is dedicated to contributing to the mortgage division's success in achieving its new business acquisition target. McCullough’s specialties include the mortgage industry, specialist lending, buy-to-let, private rental sector, distribution, digital disruption, strategy, housing policy, relationship management, business development, and coaching.
Aldermore
Matt McCullough
“Just shy of 44% of all PRS properties are at A to C, as far as EPC rating is concerned, and that’s actually higher than owner-occupied, so that’s a
great start”
LOUISA SEDGWICK,
PARAGON
“I think the biggest thing throughout all this is – not just for us as lenders but brokers as well – to be more aware of what’s out there for the clients, whether there are grants available”
MARYLEN EDWARDS, MT FINANCE
“The specialist markets are the ones that are more likely to see the growth, and we certainly are, particularly around those high-yielding property types – the HMOs, MUBs”
BARRY LUHMANN,
UNITED TRUST BANK
“The inquiries that we’re seeing day-to-day now are landlords looking to buy the properties already in that state of A to C, so your newer builds, your newer converted. It’s a great move for the market”
MATT MCCULLOUGH, ALDERMORE
In Partnership with
Why buy-to-let remains strong
These are demanding days for the buy-to-let market, as lenders, brokers, and landlords negotiate an uncertain economy. But, as Mortgage Introducer’s roundtable discovers, the sector is in good heart
Read on
Matt McCullough
Aldermore
Marylen Edwards
MT Finance
Barry Luhmann
United Trust Bank
Louisa Sedgwick
Paragon
Industry experts
FEW AREAS of the property market will have felt immune to the turmoil of the economy over the past year – and certainly the buy-to-let sector faces as many challenges as any.
Rapidly rising interest rates and soaring inflation, together with the tightening grip of a cost-of-living crisis, have sent jitters through the rental market – for landlords and tenants alike.
With mortgage products hastily withdrawn – and subsequently reintroduced – there’s been much to get brokers and property owners talking. With the added pressure of meeting more stringent Energy Performance Certificate (EPC) regulations, there’s been speculation aplenty that many landlords will sell up and exit the market.
With this in mind, Mortgage Introducer brought together four key industry professionals for a special discussion: Louisa Sedgwick, commercial director of Paragon; Barry Luhmann, head of buy-to-let mortgages at United Trust Bank (UTB); Marylen Edwards, head of lending – BTL at MT Finance; and Matt McCullough, national sales director at Aldermore.
Our panel began by giving their assessment of the buy-to-let market.
“It’s worthwhile highlighting the mini budget,” Sedgwick said. “Everybody decided to look at their products, some of which were removed from the market. Some products stayed in the market. And the impact of that is that not a great deal of business was written at the back end of 2022. And of course, that naturally affects the early part of 2023 in respect to completions.”
Luhman agreed that there had been a temporary drop-off in business.
“By the time we got to January, our volumes were back to where they had been,” he explained. “But I think that’s purely because UTB, like some of the other newer lenders in this market, was on such a high growth curve. And then we’ve powered on from there, and I think the market is now seeing growth.”
McCullough believed the resilience of businesses had been tested in the wake of the mini budget.
“It did highlight which lenders are very nimble from a system perspective and a product perspective,” he said. “We saw the evolution of some new products like higher fees/low rates to help with what is now a challenge, which is the yield versus the ICR [interest coverage ratio] in a lower LTV output.”
Marylen Edwards reflected on how MT finance had been affected, soon after entering the buy-to-let market.
“We had six weeks of really good business, volumes growing, and then obviously September happened,” she reflected. “Thankfully, we didn’t have a legacy back book. So we were able to push forward and honour the pipeline that we’d generated by that point, but it did slow down our 12-month plan. However, since the start of this year, business has just grown.”
McCullough believed the specialist sectors would now see the benefits of business around high-yielding properties like HMOs (houses in multiple occupation) and MUBS (multi-unit blocks).
“There’ll be a lot of transactions in limited company buy-to-let,” he reasoned. “Is that increasing the number of people owning property in the buy-to-let sector? Maybe not. It’s probably just those people who transferred from individual to company on their five-year run-off to make it more tax efficient. But what I would say is it’s a great time to be in specialist lending for the buy-to-let sector.”
Luhmann commented, “The specialist markets are the ones that are more likely to see the growth – and we certainly are, particularly around those high-yielding property types like the HMOs, the MUBs. But we’re also seeing high demand for our holiday let proposition. I think we are seeing some rent inflation coming through and people’s sentiment changing. Where customers were sort of perhaps sitting on the fence, they’re now starting to trade again and purchase mortgages.”
Edwards added, “I think the specialist lenders are the ones who are resilient, for the landlords anyway. The ones that have the stricter criteria and the lack of, I suppose, a bit of flexibility where the market now needs it are the ones where maybe the clients and brokers are finding it hard to place business.
“Lenders are coming up with products that may have slightly higher fees but allow the landlords to stress accordingly. And I think it’s just a case of everybody – lenders, brokers and landlords – working together,
to get a right balance back. But the growth
is definitely there.”
Did Sedgwick share this positivity?
“It’s interesting with the HMO world,” she reflected, “in a cost-of-living crisis, the number of people who are looking to either share – because, of course, bills shared are quite significantly cheaper – or just downsizing [is increasing]. So, I think that, absolutely, MUBS and HMOs are set to grow.”
Luhmann had seen a swing toward high-yield properties.
“If I must pick one area, that’s the one we're seeing huge demand for,” he commented. “Anything that drives the ICR – so, limited company with the lower ICR tax, anything that makes it more tax-efficient. They’re all the areas that we’re seeing growth in.”
Edwards chimed in, “I think HMOs and MUFBs [multi-unit freehold blocks] are the way landlords are looking to maximise their asset to get capital growth – but also, the holiday lets, short-term lets, Airbnbs, [and] serviced apartment facilities are another way in. The landlords can get good capital gain from that, that allows them then to buy more properties. A lot of the big cities and the holiday destinations have lost an awful lot of B&Bs and guest houses just naturally through decline over the years, and that’s where these types of properties step in.”
Sedgwick believed remortgaging would be big business.
“There are 35,000 buy-to-let properties that are due to be refinanced in some capacity this year, so that's quite a significant market opportunity,” she remarked. “Last year there were 44,000 new SPVs [special purpose vehicles] set up to support buy-to-let properties. So, again, that's another growth area, I think, for the market.”
McCullough agreed. “There are thousands upon thousands of SPVs that have been set up for limited-company buy-to-let purposes. The biggest thing is, though, all these run-offs that are happening this year, a lot of them in individual name, will start to transfer to company with the right tax advice. So there’s a big pocket of business there to be had from limited-company lenders.”
How big a role would buy-to-let finance play in making privately rented homes more sustainable?
“This is the direction of travel for the market,” answered Luhmann. “The landlord is likely to see higher demand for that property, higher rents, and then possibly higher capital value. So there’s good motivation there for landlords to do this, and clearly it takes money, so the landlord is going to either need the finance or want to take out finance because it’s more tax-efficient.”
Sedgwick pointed out, “Interestingly, just shy of 44 per cent of all PRS [private rented sector] properties are at A to C, as far as EPC rating is concerned, and that’s actually higher than owner-occupied, so that’s a great start. There are about 2,500 properties that still need some sort of retrofit or upgrade to get them to that A to C EPC rating, so I think as far as lenders are concerned, we need to be really innovative in respect of retrofitting-type products.”
As one of the pioneers of buy-to-let, Paragon has been helping UK landlords to grow their businesses for more than 25 years. Working with its network of key intermediaries, the lender prides itself on an extensive mortgage range so that they can find the right mortgage for their clients, no matter how big or small their portfolios. Paragon’s in-depth knowledge of buy-to-let and the UK’s private rented sector means that it fully understands landlords’ requirements. From simple and straightforward propositions to specialist and complex cases, it has the experience and expertise to meet their needs.
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A specialist bank and multi-award-winning lender, United Trust Bank offers a range of specialist mortgage products, including first-charge and second-charge residential mortgages and a suite of first-charge mortgages for buy-to-let Investment properties. Its products are designed to accommodate customers whose situations or requirements don’t meet mainstream lenders’ criteria. With what it describes as its flexible, common-sense approach to underwriting, it can often provide mortgages for borrowers, property types, and property locations that mainstream buy-to-let lenders will not consider. It aims to provide outstanding service, and says its broker relationships are key to its ability to deliver value-added funding solutions.
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MT Finance was set up in 2008, in response to a lack of funding options available from high-street banks following the financial crisis. It was created to fill the need for reliable, flexible, and fast access to funds by establishing itself as a bridging finance lender. Since then, MT Finance has evolved into a multi-award-winning specialist finance lender, and prides itself on helping thousands of borrowers turn their aspirations into achievement through its range of buy-to-let mortgage and bridging loan products. Its commitment remains to support borrowers with fast and fuss-free loan products that are flexible from the outset.
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An experienced financial services professional with a proven track record of success, McCullough brings many years of industry experience to the table and holds a key leadership role within Aldermore’s Intermediary Distribution team. He says his primary focus is on the leadership, management, and development of its field-based relationship manager team, with the goal of supporting the acquisition of quality mortgage business. He is dedicated to contributing to the mortgage division's success in achieving its new business acquisition target. McCullough’s specialties include the mortgage industry, specialist lending, buy-to-let, private rental sector, distribution, digital disruption, strategy, housing policy, relationship management, business development, and coaching.
Aldermore
Matt McCullough
Responsible for developing and implementing MT Finance’s buy-to-let proposition and underwriting practices, Edwards has thirty years of experience in the industry. She began her career as a mortgage and commercial manager with Lloyds Bank in 1994, before spending 10 years as a buy-to-let and commercial broker. Since then, she has held several senior roles, including positions at Metro Bank, Axis Bank, and Together. Edwards launched buy-to-let at MT Finance in 2023 and aims to grow the business to be as successful as the company’s established bridging arm. She values the adaptability of the industry, which she believes has made it the successful market it is today.
MT Finance
Marylen Edwards
With a wealth of experience in financial services, Luhmann’s entry into mortgages began in a corporate venturing business unit, where he co-founded a specialist mortgage brokerage within Lloyds Bank. When this was sold in 2007, Luhmann took over the product management of Lloyds International lending, with a portfolio of £7b, spread from the Isle of Man to Hong Kong. He moved to BlackRock European Mortgages Strategies in 2014, where the team purchased BTL and lifetime mortgage originations from specialist lenders, funding and securitising these portfolios. He joined United Trust Bank in 2021 to build, launch, and lead the bank’s buy-to-let proposition.
United Trust Bank
Barry Luhmann
Working in financial services for over 30 years, Sedgwick started her career at Bradford & Bingley, and quickly moved into the intermediary mortgage world, where she has held a number of senior positions. These have included the management of her own company, in which she advised institutions on financial service issues; working as Leeds Building Society’s head of intermediary distribution; and, recently, joining Paragon as its commercial director. Sedgwick says a core aspect of her career has been to understand the needs of intermediaries and to promote innovative products.
Paragon
Louisa Sedgwick
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Published 30 MAY 2023
UK’S BUY-TO-LET BY NUMBERS
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“There are 35,000 buy-to-let properties that are due to be refinanced in some capacity this year, so that’s quite a significant market opportunity,” she remarked. “Last year there were 44,000 new SPVs [special purpose vehicles] set up to support buy-to-let properties. So, again, that’s another growth area, I think, for the market.”
McCullough agreed. “There are thousands upon thousands of SPVs that have been set up for limited-company buy-to-let purposes. The biggest thing is, though, all these run-offs that are happening this year, a lot of them in individual name, will start to transfer to company with the right tax advice. So there’s a big pocket of business there to be had from limited-company lenders.”
Edwards was concerned for landlords who faced big bills getting older properties up to standard.
“It won’t necessarily give them the capital value back on what they have to spend,” she suggested. “I think the biggest thing throughout all this is – not just for us as lenders but brokers as well – to be more aware of what’s out there for the clients, whether there are grants available, what lenders can actually do to help, [using] bridging products maybe when necessary for the clients to help get the properties up to spec, and then putting them onto a buy-to-let product.”
As the discussion drew to a close, the panel was asked to come up with one tip for brokers as they seek to maximise success in the buy-to-let sector.
“There’s some fantastic information on the lenders’ websites, there’s case studies. They could just spend half an hour of their time looking and they'll gain so much from it,” Sedgwick offered.
For Edwards, too, knowledge was key.
“The more the brokers understand, the more they will be able to help their clients,” she emphasised. “It’s not just getting the application to offer; it’s working with the clients still and pushing the solicitors to get that deal all the way through.”
McCullough said, “If I were an intermediary, the first thing I’d be doing right now is linking and associating my business and myself with a tax specialist, because it’s frightening to see how many of the applications and inquiries that we see on a day-to-day basis [are ones in which] the tax process and the mortgage process contradict each other. They need to be in harmony in this market.”
Luhmann’s advice was not to give up on a case.
“Keep trying,” he insisted. “There’s generally a home for almost any case – you’ve just got to find the right lender.”
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Offering a range of buy-to-let mortgage options to support landlords looking to expand their portfolios and those who are just starting out, Aldermore says its team truly understands the market and is on hand to support brokers and clients all the way. It also caters for first-time buyers, those with a small deposit, or people who’ve experienced credit blips in the past. Additionally, it supports the self-employed, who need a lender who understands their earnings so they’re not neglected by the mortgage market. Aldermore describes itself as “the lender who likes a challenge and will always look for ways to say ‘yes.’”
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13.6%
Percentage of total mortgage lending that is buy-to-let
211,000
Number of buy-to-let mortgages authorised by lenders in 2022
£41.8b+
Value of buy-to-let mortgage advances in 2022
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UK’S BUY-TO-LET BY NUMBERS
2.74m
£8.5b
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42%
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McCullough remarked, “The inquiries that we’re seeing day-to-day now are landlords looking to buy the properties already in that state of A to C, so your newer builds, your newer converted. It’s a great move for the market to get the PRS into a really good state of play from a sustainability perspective, because it’s great for a lender as well. I do fear that if we really heavily regulate the sustainability area of buy-to-let, it might leave substandard properties on the market in the future for the owner-occupied space.”
Edwards was concerned for landlords who faced big bills getting older properties up to standard.
“It won’t necessarily give them the capital value back on what they have to spend,” she suggested. “I think the biggest thing throughout all this is – not just for us as lenders but brokers as well – to be more aware of what’s out there for the clients, whether there are grants available, what lenders can actually do to help, [using] bridging products maybe when necessary for the clients to help get the properties up to spec, and then putting them onto a buy-to-let product.”
As the discussion drew to a close, the panel was asked to come up with one tip for brokers as they seek to maximise success in the buy-to-let sector.
“There’s some fantastic information on the lenders’ websites, there’s case studies. They could just spend half an hour of their time looking and they'll gain so much from it,” Sedgwick offered.
For Edwards, too, knowledge was key.
“The more the brokers understand, the more they will be able to help their clients,” she emphasised. “It’s not just getting the application to offer; it’s working with the clients still and pushing the solicitors to get that deal all the way through.”
McCullough said, “If I were an intermediary, the first thing I’d be doing right now is linking and associating my business and myself with a tax specialist, because it’s frightening to see how many of the applications and inquiries that we see on a day-to-day basis [are ones in which] the tax process and the mortgage process contradict each other. They need to be in harmony in this market.”
Luhmann’s advice was not to give up on a case.
“Keep trying,” he insisted. “There's generally a home for almost any case – you've just got to find the right lender.”
Offering a range of buy-to-let mortgage options to support landlords looking to expand their portfolios and those who are just starting out, Aldermore says its team truly understands the market and is on hand to support brokers and clients all the way. It also caters for first-time buyers, those with a small deposit, or people who’ve experienced credit blips in the past. Additionally, it supports the self-employed, who need a lender who understands their earnings so they’re not neglected by the mortgage market. Aldermore describes itself as “the lender who likes a challenge and will always look for ways to say ‘yes.’”
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McCullough remarked, “The inquiries that we’re seeing day-to-day now are landlords looking to buy the properties already in
that state of A to C, so your newer builds, your newer converted. It’s a great move for the market to get the PRS into a really good state of play from a sustainability perspective, because it’s great for a lender as well. I do fear that if we really heavily regulate the sustainability area of buy-to-let, it might leave substandard properties on the market in the future for the owner-occupied space.”
Edwards was concerned for landlords who faced big bills getting older properties up to standard.
“It won’t necessarily give them the capital value back on what they have to spend,” she suggested. “I think the biggest thing throughout all this is – not just for us as lenders but brokers as well – to be more aware of what's out there for the clients, whether there are grants available, what lenders can actually do to help, [using] bridging products maybe when necessary for the clients to help get the properties up to spec, and then putting them onto a buy-to-let product.”
As the discussion drew to a close, the panel was asked to come up with one tip for brokers as they seek to maximise success in the buy-to-let sector.
“There’s some fantastic information on the lenders’ websites, there’s case studies. They could just spend half an hour of their time looking and they’ll gain so much from it,” Sedgwick offered.
For Edwards, too, knowledge was key.
“The more the brokers understand, the more they will be able to help their clients,” she emphasised. “It’s not just getting the application to offer; it’s working with the clients still and pushing the solicitors to get that deal all the way through.”
McCullough said, “If I were an intermediary, the first thing I’d be doing right now is linking and associating my business and myself with a tax specialist, because it’s frightening to see how many of the applications and inquiries that we see on a day-to-day basis [are ones in which] the tax process and the mortgage process contradict each other. They need to be in harmony in this market.”
Luhmann’s advice was not to give up on a case.
“Keep trying,” he insisted. “There’s generally a home for almost any case – you've just got to find the right lender.”
Offering a range of buy-to-let mortgage options to support landlords looking to expand their portfolios and those who are just starting out, Aldermore says its team truly understands the market and is on hand to support brokers and clients all the way. It also caters for first-time buyers, those with a small deposit, or people who’ve experienced credit blips in the past. Additionally, it supports the self-employed, who need a lender who understands their earnings so they’re not neglected by the mortgage market. Aldermore describes itself as “the lender who likes a challenge and will always look for ways to say ‘yes.’”
Find out more
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