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Buy-to-let - a silver lining?. Steve Carruthers / Graham Felstead Corporate Account Manager / Head of Corporate Accounts 08459 00 11 10 www.rbsip.com. Agenda. Market overview Opportunities for buy-to-let Advising on buy-to-let - how you can help Why NatWest?. Market overview.
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Buy-to-let - a silver lining? Steve Carruthers / Graham Felstead Corporate Account Manager / Head of Corporate Accounts 08459 00 11 10 www.rbsip.com
Agenda Market overview Opportunities for buy-to-let Advising on buy-to-let - how you can help Why NatWest?
Market overview Pressure on disposable income, weakened housing market Movements in the Base rate - how does this affect the market? Impacts on interest rates / products: credit crunch funding less FTB products, lower LTV restrictions First-time buyers - less demand due to: reduced confidence, less affordability, tighter lending criteria Home movers - uncertain market, negative equity threat Where does this leave the buy-to-let market?
Market overview House price growth (CML data)
Is Buy-to-let affected? Michael Coogan, CML Director General:“Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent.Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market.”Daily Telegraph - Feb 08 The CML expects to see a continued “healthy appetite” for buy-to-let finance in 2008 in line with continued demand for rental property.
Is Buy-to-let affected? Number of buy-to-let mortgages: 2006: 846,000; 2007: 1,083,000 (up 23%!)
Is Buy-to-let affected? Buy-to-let sector represents 12% of gross mortgages, up 50% from 8% (June 2005 to June 2007)
Opportunities in the buy-to-let market? 2007 Figures from CML and ARLA: 90% of landlords have no intention of selling for some time just 2% of landlords intend to sell when their tenants’ lease expires 40% of landlords expect to invest further in buy-to-let market Only 0.12% of all buy-to-let mortgages in force were repossessions in Q4 2007, compared to 0.16% in the residential mortgages sector First-time buyers: nervousness / affordability issues mean more will turn to the rental market Buying property to let is no longer a short-term gain, but it remains a long-term investment
Opportunities in the buy-to-let market? Migration impact: over 500,000 people are coming to Britain from abroad each year - typically they rent Regional variations - one size does not fit all More and more multiple applicant buyers (deposits/affordability)
Broker opportunities for Buy-to-let Understand the buy-to-let market (finding property, landlord responsibilities) Advising on: Mortgages know the market, find the best deal for the customer Bridging finance understand short-term funding, open / closed loans negotiate fees with lender Insurance Look at cross-selling opportunities (e.g. buildings and contents, legal expenses, emergency assistance, Rent guarantee and Tenant’s insurance look at commission opportunities
Broker opportunities for Buy-to-let Stay in touch - regular 6/12 month reviews possibilities for fee-based advice Generate links with associated professionals - solicitors, estate agents, letting agents
Buy-to-let knowledge - finding a property Build relationships with estate agents / rental associations to understand local opportunities Current national and local issues include: Northern market prefers ‘renovate to rent’ - suburban houses Southern market prefers centrally located new-build flats Southern buyers looking North for ‘value’ purchases Find key local hotspots for growth (industrial regeneration areas) Is the property right for potential tenants (e.g. near to a school for families, transport links, central for flats)
Buy-to-let knowledge - being a landlord Need to know/understand: Running costs - ground rent, service charges, repairs, letting/management fees Landlord and tenant law Tenancy agreements Safety regulations and responsibilities Costs of using a letting agent (could be 10 -15% of the rent) Costs/benefits of furnished v unfurnished properties Advising on all of these can offer income opportunities
Where to go for more help A number of associations have plenty of information available: Council of Mortgage Lenders (www.cml.org.uk) Association of Residential Letting Agents (www.arla.co.uk) Royal Institution of Chartered Surveyors (www.rics.org/) National Association of Estate Agents (www.naea.co.uk)
Summary Buy-to-let market is sustainable Significant long-term income opportunities Lots of help is available NatWest buy-to-let proposition offers a full range of solutions
NatWest - how we can help NatWest is the specialist buy-to-let lender for RBS Intermediary Partners Our buy-to-let proposition: up to 4 applicants on a mortgage a wide range of property types can be accepted up to 10 loans accepted (across the RBS Group) up to 10% overpayments accepted during the loan period Fixed £ product/arrangement fees (not a % of the loan) One simple rental cover tier: 125% at BoE rate + 1.75% up to 85% max LTV (65% for new build flats) fees-free re-mortgage package available
Thank you For more information: call: 08459 00 11 10 www.rbsip.com