To promote and protect private residential landlords A Bright Future for Buy to Let NLA Mortgages Andrew Rudkin

To promote and protect private residential landlords Agenda Introduction Is this a good time to be a Landlord? The BTL marketplace Looking forward Paragon Mortgages / Mortgage Trust NLA Mortgages Summary and Questions

To promote and protect private residential landlords Introduction Provided by TBMC Group Award winning specialist broker and distributor Systems and expertise Paragon Group

To promote and protect private residential landlords Owner-occupation and social renting in decline 4 UK owner-occupation peaked at 69.7% in 2002 – fell to 64.7% by 2011 Social housing fallen to 18.1% from 24.4% in 1993 Social housing peaked at 30% in 1971 % % Source: DCLG Owner-occupiers and social renters

To promote and protect private residential landlords Owner-occupation and social renting in decline 5  PRS currently accounts for 17.2% of housing stock in the UK  Savills forecasts PRS will account for 27% by 2020  PRS is the only growing housing tenure - increased by 93% since million (more than one in six) properties  Forecast to grow to 5.8 million by 2018  Provides vital accommodation for diverse range of tenants, including mobile workers, young professionals, students, economic migrants  Important social role - housing people on low incomes, with 25% of PRS in receipt of Housing Benefit  Makes an important economic contribution  UK PRS worth £500 billion - larger than UK commercial property sector 000s units Source: DCLG/CB Richard Ellis/Savills UK private rented sector 1988 Housing Act BTL introduced

To promote and protect private residential landlords Why is now a good time to be a landlord? Property Prices. Average current property prices up 7.1% on 2012 Future property prices?...forecasts reflect continued steady growth. Supply & demand – current shortage of around 1 million homes in UK. New housing remain at low levels Normally around 175,000 units per annum 142,000 completed in 2011 Need to build 240,000 new homes each year

To promote and protect private residential landlords 1.8m people currently on council house waiting lists in England Up 10% over last 5 years Increasing Rents. Average rental return of 5% for houses and 5.2% for flats 39% of landlords increased rents in Q Outlook for Private Rented Sector. PRS is growing – up from 10.1% of housing stock in UK to 17.2% in 2011 and predicted to increase to 27% by 2020 (Savills) Why is now a good time to be a Landlord?

To promote and protect private residential landlords Tenant Demand Remains Strong Mortgages for first time buyers still difficult with stringent underwriting criteria Growing student population. Growing immigrant population. Mobile workforce. Split families. Personal choice...movement towards European market? Average void period – 3 weeks 46% of ARLA agents reported more tenants than properties Why is now a good time to be a Landlord?

To promote and protect private residential landlords The Buy to Let Marketplace The BTL marketplace

To promote and protect private residential landlords 10 Impact of financial crisis Recovery Competition vastly reduced Market dominated by two lenders Criteria more restricted Higher gross margins reflect high cost of funds and capital Particular shortage of products for professional landlords BTL seen as low risk / higher margin opportunity for lenders More lenders/more funding/more products Underwriting more flexible and criteria improving Lloyds and Nationwide still dominate Lenders

To promote and protect private residential landlords The Buy to Let Marketplace Total MarketBTL Market% Share Estimated natural Buy to Let mortgage market - £25bn - £30bn Total MarketBTL Market% Share 2007£360bn£45bn12.6% 2011£140bn£14bn10% 2012£143bn£16.4bn11.5% 2013 (estimate)£170bn£20bn11.7% Buy to Let Lending

To promote and protect private residential landlords Buy to Let Lending Majority of lenders impose stifling aggregate lending limits

To promote and protect private residential landlords Only a few specialist BTL lenders cater for the professional landlord sector - Paragon, Aldermore, Kent Reliance and TMW. What differentiates the professional sector? HMOs and multi unit properties Variety of tenant types (including DSS and students) Larger portfolios Limited company lending More complicated underwriting propositions Larger lending limits Lenders and their approach to market

To promote and protect private residential landlords Buy to Let Looking forward

To promote and protect private residential landlords Continued recovery in 2014 with more lenders Concentration on mainstream buy to let There are now 30 plus lenders offering a wide range of products Overall Buy to Let lending has proven to be very resilient during the crises with many lenders reporting lower arrears than residential mortgages The Buy to Let Marketplace

To promote and protect private residential landlords The Buy to Let Marketplace – looking forward Mortgage products: More choice – fixed rates/discounts/trackers Easing of rental requirements Increase in available products Over 2000 products available in 2007 Down to less than 80 in 2008 Over 400 products now available and expected to increase

To promote and protect private residential landlords Paragon Mortgages Professional landlords HMOs – 3 years experience as a landlord Multi Unit properties – max 20 units, 3 years experience Limited company Lending Under 6 month ownership remortgages Portfolio lending up to £5m Lending up to 75% LTV Maximum loan £2m per property No restriction to number of properties in a portfolio All the above difficult to place elsewhere! The Buy to Let Marketplace – looking forward

To promote and protect private residential landlords Wide range of acceptable tenancies ASTs (6-12 months) Student and Housing Benefit tenants Company lets (up to 3 years) Local Authorities and Housing Associations (up to 5 years) New Build Experienced “In house” surveyors Rental calculation assessed on individual or joint tenancy The Buy to Let Marketplace – looking forward

To promote and protect private residential landlords Mortgage Trust Simple BTL product range Simple application process, immediate decision Competitive rates Standard properties, single ASTs Available through NLA mortgages The Buy to Let Marketplace – looking forward

To promote and protect private residential landlords NLA Mortgages Bespoke mortgage service for NLA members Whole of market offering Currently 30 Lenders with close to 400 products Self select from a web based sourcing system Cash back incentive on all products available for NLA members only Website – Helpline –

To promote and protect private residential landlords

To promote and protect private residential landlords Summary Private rented sector will continue to grow and is a vital part of housing infrastructure in the U K BTL is good business for Lenders but a specialist area Traditional & new Lenders will emerge into the market More products and special deals will become available Still a good time to be a Landlord

To promote and protect private residential landlords Questions