Precise Mortgages, the UK’s leading specialist lender*, has appointed two more Business Development Managers to further strengthen its support for brokers in the London South East and the South West regions of England.
The lender has appointed Peter Coombes to support brokers in the Brighton, Bromley, Croydon, Canterbury, Dartford, Rochester, Redhill, South East London and Tunbridge Wells postcodes. It has also appointed Stuart Ottery who will be responsible for the Bath, Bristol, Cardiff, Exeter, Gloucester, Newport, Oxford, Swansea, Swindon and Taunton postcodes.
Peter previously worked as a mortgage broker and mortgage adviser before joining Precise Mortgages, while Stuart was a Business Development Manager for the Coventry Building Society and Principality Building Society before making the move.
Their arrival is part of a restructuring of Precise Mortgages’ Sales Team which will see their predecessors, Dan Watson and Stephen Wrigley, move into new Specialist Distribution Manager for Bridging roles within Precise Mortgages, enabling the lender to provide nationwide support for its Bridging proposition.
Jamie Pritchard, Head of Sales for Precise Mortgages, said: “I am delighted to welcome both Peter and Stuart to our Sales Team. They are two new recruits of the highest calibre and I know they are raring to go and support our lending proposition.
“I know Stuart already has the respect of the brokers in his area and will bring real value to the role, while Peter brings with him a vast amount of broker experience that will serve him well in building broker relationships and help him promote all areas of Precise Mortgages’ products.”
Source: * BVA BDRC Project Mercury Report Q4 2018
Precise Mortgages, the UK’s leading specialist lender1, has extended its Help to Buy range to include Help to Buy Scotland and Help to Buy Remortgage options.
With the Scheme extended to 2023, Precise Mortgages is showing its support by offering Help to Buy loans in Scotland for the first time, as well as becoming one of the first specialist lenders to offer remortgage options.
The lender’s Help to Buy Scotland offering enables customers to choose from a range of Fixed rate products, with purchase and remortgage options available up to 80% LTV. Its Help to Buy Remortgages provide customers with pound-for-pound options up to 75% LTV (up to 80% in Scotland) on a range of 2, 3 and 5 Fixed rate products.
Both products are available to customers with less than perfect credit profiles and those who need the services of a specialist lender. There are no products fees for remortgages, while both purchase and remortgage products include a refund of the valuation fee and offer a cashback feature.
The lender’s Help to Buy offering is backed up by a dedicated Priority Processing team which is dedicated to assessing cases within 48 hours and making offers within 21 days, as well as providing broker support and regular progress updates.
Alan Cleary, Managing Director of Precise Mortgages, said: “The Help to Buy scheme has been a huge success since its launch in 2013, helping hundreds of thousands of aspiring homeowners take their first step onto the property ladder. These latest additions to our Help to Buy range will help even more customers in realising their home owning dreams.
“We’re pleased to show support for the Scottish market by offering Help to Buy Scotland for the first time, whilst our Help to Buy Remortgages will help early adopters of the scheme make the transition from becoming first time buyers to established homeowners.”
Source: 1 BVA BDRC Project Mercury Report Q4 2018
New research* from Precise Mortgages, the UK’s leading specialist lender**, shows landlords with bigger portfolios have swung dramatically to using limited company status for new purchases highlighting the ongoing switch in the buy- to-let market as landlords reshape portfolios.
Nearly two out of three (64%) of landlords with more than four properties who plan to buy this year will use limited company status compared with just 21% who intend to buy as individuals.
Across the market as a whole 44% of landlords planning to buy will use limited company status but that drops to 17% among landlords with one to three properties. Around two out of five (37%) of smaller portfolio landlords will buy as individuals, the research shows.
Research* for Precise Mortgages found more than six out of 10 landlords planning to fund new purchases this year will use BTL mortgages. However, the study found 73% believe lending criteria and portfolio application process changes introduced by the Prudential Regulation Authority are making it more difficult to secure mortgages while 57% say the changes will slow applications down.
Limited company status is growing in popularity as the phased reduction in mortgage interest tax relief does not affect limited company landlords who can continue to offset mortgage interest against profits - which are subject to Corporation Tax of 19% instead of income tax rates.
The interest coverage ratio on limited company applications is also lower than for most individual landlord applications.
Alan Cleary, Managing Director of Precise Mortgages, said: ““The buy-to-let market is changing and the switch to greater use of limited company status is one aspect of the development underlining the increasing maturity of the sector.
“There are good reasons why limited company buy-to-let is dominating the purchase market and we expect that will continue to be the case this year and next. Brokers and customers however need expert specialist support when buying as a limited company or considering switching to limited company status as there are considerable costs involved.”
Precise Mortgages has a specialist limited company buy to let intermediary support team available at [email protected]. Full details of its range of products designed specifically for applications within limited companies are available at www.precisemortgages.co.uk.
Alan Cleary - Managing Director of Precise Mortgages
Zero hours contracts are a point of contention for many people. One side (typically the employers) argue they’re flexible and provide employees with choices; the other, the workers themselves, claim they have reduced rights as a result.
There have been several high profile court cases on the subject, most notably brought by Deliveroo couriers and Uber drivers. Uber drivers won the legal right to be treated as employees, thereby qualifying for sick pay, maternity cover and holiday pay among other things. Uber meanwhile is appealing.
Politicians have also waded in. Labour’s shadow chancellor John McDonnell has been very vocal about his wish to ban zero hour contracts, laying out his proposals at last year’s party conference.
And last month the zero hour contracts debate reared its head again after the TUC claimed1 that those working on the contracts are typically paid a third less than other workers and they get all the worst shifts. The TUC polled 3,287 workers - 300 of them zero hour staff – and called on government to ban zero hour contracts, as well as take ‘further action to tackle exploitative and insecure work’.
Theresa May’s government meanwhile looks unlikely to act any time soon. Responding to the TUC in February2, the government said a ban would ‘impact more people than it would help’. A business department spokesman told the BBC: ‘They provide flexibility for both employers and individuals, such as carers, students, or retirees.’
In February, the Office for National Statistics (ONS)3 published estimates showing around 844,000 people were in employment on zero hours contracts in their main job in the UK in 2018 - some 57,000 fewer than for a year earlier. However, long-term there has been a significant rise in the number of people in this type of work. The ONS Labour Force Survey reported just 147,000 people in employment in October to December 2006 were on a zero hour contract. In the same period last year, that number was 844,000.
Much has been written about the growing need for mortgage finance for the self-employed and we at Precise Mortgages, along with various other building societies and specialist lenders, have worked closely with brokers to develop our criteria so that we can help more self-employed mortgage applicants.
There are several challenges when it comes to assessing affordability for the self-employed, but particularly for those on zero hours contracts. For example, the TUC research found that on average, zero hours workers work 25 hours a week, compared to the average employed worker, who works 36 hours a week. The TUC figures also show that one in seven zero hour workers (16 per cent) do not have work every week, while the ONS figures show that a third of zero hours workers have been with their current employer for less than 12 months.
However, just because these people choose to work in this way, doesn’t mean we can’t lend to them. We have developed criteria specifically aimed at supporting borrowers who choose to work on zero hour contracts, and recently extended our criteria to include second applicants.
Zero hour contracts are now permitted when the secondary applicant (i.e. not the main income earner) is employed on this basis. In order to be as flexible as possible, we only require payslips covering the last six months and the borrower’s latest P60. Eligible income is the lower of the average pay from the last three months or last six months.
Whether or not zero hours contracts should be banned is up to others, but while they exist, there is a responsibility among lenders not to unfairly exclude these workers from the chance to own a home with a mortgage.
Sources:
1 https://www.tuc.org.uk/news/zero-hour-workers-twice-likely-work-%E2%80%9Chealth-risk%E2%80%9D-night-shifts-%E2%80%93-tuc-analysis
2 https://www.bbc.co.uk/news/business-47193809
3 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/february2019
Alan Cleary - Managing Director of Precise Mortgages
Landlords have seen a lot of change over the past few years – the introduction of the Stamp Duty surcharge, the reduction in tax relief, and tougher affordability and stress-testing by lenders.
The latest UK Finance figures1 show there were 5,100 new buy to let home purchase mortgages completed in December 2018, some 5.6 per cent fewer than in the same month a year earlier. By value this was £0.7 billion of lending in the month, 12.5 per cent down year-on-year. In 2018, there were 66,400 new buy to let home purchases completed, some 11.5 per cent less than in 2017. The £9 billion of new lending in the year was 15 per cent less than in 2017.
But regardless of the new buy to let environment, the savviest landlords have adapted and survived.
It’s been interesting to see the different approaches they have taken to protect and even improve their yields over the past three years. The movement of capital out of high value areas such as London and the South East of England towards regional hubs has been well documented.
But property types, what you do with them and how you finance your portfolio has also been a strategy that many larger scale landlords have adopted. Here are the three trends we’re seeing more and more of as landlords rebalance their portfolios to maximise yields.
Top slicing
After the Bank of England introduced stricter stress-testing on affordability for buy to let mortgages, nearly all lenders hiked their interest coverage ratios from a standard 125 per cent at 5 per cent to 145 per cent at 5.5 per cent. After a few months, and some tentative toe-dipping, several lenders began to relax this back, particularly where landlords were paying basic rate income tax.
Precise Mortgages believes that affordability should be considered for a borrower’s holistic financial position. To that end, we brought in top slicing on buy to let remortgages, allowing customers to secure the buy to let loan size they need by using their excess disposable income to top up any rental shortfall. This has proved to be a really popular option for landlords looking to maintain properties, particularly in London and the South East where rents are already very high.
This type of flexible approach to income assessment has also helped to support the buy to let remortgage market. The UK Finance figures showed 12,400 new buy to let remortgages completed in December 2018, some 25.3 per cent more than in the same month a year earlier. By value this was £2.0 billion of lending in the month, 25 per cent more year-on-year.
In 2018, there were 169,100 new buy to let remortgages completed, some 11.2 per cent more than in 2017. The £27 billion of new lending in the year was 11.6 per cent more than in 2017.
Add value
Rather than buy a property ready-made to let – at a premium – increasingly landlords have opted to purchase sub-standard properties at a lower market value and then refurbish them to add capital value, improving yields by maximising the rental income possible.
There are various ways to finance this approach, but bridging finance has proved very popular with landlords looking to expand their portfolios. We spotted this trend around a year ago and, in the autumn, launched our Refurbishment Buy to Let proposition with selected brokers to see how it went down.
The answer is – it went down a storm. The product works by combining a short-term bridging loan that rolls up interest while the refurbishment is undertaken. When the property is ready to let and meets the expected valuation, the borrower exits on to a standard buy to let term mortgage – but the beauty of it from the borrower’s perspective (and the broker’s) is that there is no need to resubmit an application for the buy to let loan. The whole deal is underwritten at the outset. Naturally there are two procuration fees, given it is two separate loans.
Complex
We have seen a gradual shift in the profile of landlords we are lending to. There has been a noticeable exit of smaller scale amateurs from the market, freeing up properties for first-time buyers to purchase (this shows in the UK figures for 2018, which put the number of first-time buyers at its highest for 12 years). We’ve also seen larger scale landlords offload lower yielding properties in favour of reinvesting capital into larger scale options.
Houses in multiple occupation and multi-unit buy to lets have seen a real uptick in popularity following the tax changes for landlords. Not only do these more complex property types allow landlords to maximise rental incomes, they also offer greater protection for landlords from void periods.
So the buy to let market may be down, but it’s definitely not out. In fact the level of professionalism has improved the quality of deals being done, something that should be seen as a positive.
Source: 1 https://www.ukfinance.org.uk/press/press-releases/number-first-time-buyers-reaches-12-year-high-2018
