Buy-to-let Alasdair McDonald and David Wilson, RBS Intermediary Partners

1. Buy-to-let Alasdair McDonald and David Wilson, RBS Intermediary Partners The RBS Intermediary Roadshow

2. Buy-to-let - a silver lining?

3. Agenda • Market overview • Opportunities for buy-to-let • Advising on buy-to-let - how you can help • Why NatWest?

4. 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?

5. Market overview continued • House prices have fallen in the first half of this year • Most commentators expect a 20-25% peak to trough fall in house prices • Since the peak in October 06, house prices have fallen 9% Quarterly changes in House Price Inflation Source: Halifax house price index

6. Market overview continued • The buy-to-let market has continued to grow • There are now over 1.1 million buy-to-let mortgages outstanding in the market Source: CML

7. Market overview continued • The buy-to-let market has continued to grow as a proportion of the total mortgage market, and now accounts for 13% of all mortgage completions Mortgage market, by value (%) Source: CML

8. Is buy-to-let affected? Michael Coogan, CML Director General:“The shortage of mortgage funding is creating similar problems for buy-to-let landlords as it is for other borrowers. However we expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now”CML press release - 26 August 2008 • The CML expects to see a continued “healthy appetite” for buy-to-let finance in 2008 in line with continued demand for rental property.

9. Opportunities in the buy-to-let market? • June 2008 figures from ARLA: • 85% of landlords have no intention of selling in the next 12 months • 72% expect to keep their properties for over 10 years • 40% of landlords expect to invest further in buy-to-let market • 60% prefer to arrange mortgages for their buy-to-let properties through a mortgage broker or financial adviser. A further 20% said it depended upon the property in question • 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

10. 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) • Regeneration opportunities - East London / 2012 Olympics • University towns • Let-to-buy

11. 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 • All of these offer new opportunities to generate income

12. 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

13. 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)

14. 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 • HIPs and EPCs are a legal requirement for landlords • Advising on all of these can offer income opportunities

15. 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)

16. 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

17. 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) • Fixed £ product/arrangement fees (not a % of the loan) • Flexible rental cover calculations: 110% at BoE rate + 1.75% for loans 1-5, up to 75% LTV); 125% at BoE rate + 1.75% for loans 5-10 and/or over 75% LTV • up to 85% max LTV (65% for new build flats) • fees-free re-mortgage package available

18. Contact us Thank you For more information: call: 08459 00 11 10 www.rbsip.com