First time landlords: A new BTL opportunity for brokers

Published: 25/04/2012

Buy-to-let is currently creating the biggest buzz in an otherwise stagnant property market. Predictions that the industry will grow to £20bn by 2015 are described by senior partner Eddie Goldsmith as refreshing in what has been a miserable few years.

However it is not just professional landlords who are contributing to the buy-to-let boom; first time landlords accounted for 23 per cent of all BTL mortgages in Q1 2012 and with it present a new, exciting opportunity to brokers.

Unlike the savvy professional, newbie landlords require different kind of advice. Whilst many are from a property background, either as a tradesman or even solicitors, there appears to be a reoccurring theme of confusion and a lack of objectivity; uncertainty over jargon and subjectivity over the type of property to purchase.

Neil Patterson is the site partner of Property 118, an online community for landlords:

“Things like ‘gearing’, ‘loan to value’, ‘valuation’ – there’s quite a few words that we will use even within our industry that will be called different things.

“The first thing to get across to a first time buyer is the difference between buying an investment property and a residential property. Often people fall in love with property whereas a BTL is more of a commercial decision. It’s a business, not a personal residence, and they don’t often understand the difference.”¹

Providing a specifically targeted service to meet the needs of this market group could allow brokers to stand out from the crowd.

There is also another type of first time landlord breaking through the BTL surface –dubbed the “accidental landlords”. Due to static nature of the conveyancing market, this market is opting to rent their existing property as a funding tool for their next move.

This means this market group boast even less industry know-how as Lee Gladwell, Business Development Director at Platform, explains:

“What we’re dealing with here is largely people who are in a situation where they have to let out their existing property in order to move.

“Brokers can do a fantastic job helping borrowers with the new set of issues that BTL mortgages throw up. If anything I think the sector could do more to promote the fact that there is that kind of breadth of advice available.”¹

Last month Platform revealed “accidental landlords” accounted for a fifth of its recent BTL business.

¹Mortgage Solutions (April 2012)

Content correct at time of publication