Brokers are concerned about the buy-to-let (BTL) remortgage crunch as the stamp duty anniversary looms.
New research from specialist lender Precise Mortgages has found brokers are braced for significant issues as they try to deal with what is likely to be a bumper crop of landlords looking to remortgage.
This is because this April marks two years since the introduction of the higher stamp duty rates for those with more than one property. Buy-to-let investors rushed to secure mortgages to buy properties ahead of April 2016 when the new rules kicked in. Two years later many will be looking to remortgage as their initial fixed deals come to an end.
The nationwide study found that one in four BTL brokers expect major problems placing remortgage deals for customers this year, while 55 per cent anticipate that they will face some issues.
Alan Cleary, managing director of Precise Mortgages, said: “Brokers are clearly nervous about potential issues with BTL remortgage cases with the stamp duty anniversary deadline looming. We see ourselves as a lender with solutions to many of the problems brokers and landlords may face.
“Many customers may be struggling to get the loan they need on the high street with lenders less willing to accept applications despite having been keen to do so ahead of the increase in stamp duty. There is a real need for specialist lenders to cater for borrowers that the high street will no longer service.”
A record £4.3bn of lending was completed in March 2016 ahead of the introduction of the higher stamp duty rate, with 28,700 BTL mortgages being advanced.
However, other changes in the market, including the phasing out of higher rate tax relief and the Prudential Regulation Authority’s portfolio lending rules, have added to the pressure.
Precise Mortgages is supporting brokers and customers with a new BTL Mortgages Submission Guide to help provide a smooth application process and improve turnaround times.
Carl Shave, director at Suffolk-based Just Mortgage Brokers, said: “The anticipated surge in potential BTL remortgage business is undoubtedly leading to concern with some brokers.
"This may be down to the historical knowledge of how unprepared certain lenders have been to manage their forecasts in spikes of business volumes or due to the more restrictive rent to borrowing ratios now applied.
"The changes in many lenders attitudes however of offering product transfers via brokers should hopefully assist. Whilst 55 per cent of BTL brokers expect issues, overall it should be seen as a great opportunity for the brokers and their clients alike.”