It’s no secret that the authorities want to see more professionalism among landlords. This also hasn’t been limited to tax changes to put off the ‘dinner-party landlords’, such as the higher rate of stamp duty on additional purchases and changes to tax reliefs.
This has been reinforced by factors such as the licensing for houses in multiple occupation (HMOs).
There are yet more changes still to come, too. Back in April 2018, rules were introduced which forced landlords to ensure that properties had a minimum energy performance rating of ‘E’ for all new lets and renewals of tenancies.
This is being extended from 1st April 2020 to cover all existing tenancies too, and if a landlord fails to meet those requirements, they will be subject to a penalty of up to £4,000.
The message to landlord borrowers is clear: letting out a property needs to be treated seriously and not just as a money-making sideline.
Higher expectations for brokers
It’s not just landlords that are being pushed to raise their game, though. Just as landlords have higher expectations to meet in order to stay on the right side of the rules, so too do brokers have a bigger role to play in terms of the advice offered.
It’s not unusual for lenders in this market to see cases which are really HMOs, but this fact not reflected in the application. For whatever reason, neither the landlord nor the broker has grasped this.
- B&C roundtable: Is the second charge bridging market growing?
- LendInvest secures £23m of new investment for real estate opportunity fund
- LendInvest promotes Andy Virgo to head of key accounts
This doesn’t just have an impact on their financing options. There are different legal requirements and responsibilities for landlords letting out HMO properties compared with, for example, a traditional two-bedroom house. What’s more, it’s worth recognising that the new rules regime is not filled with empty threats.
There is a real opportunity, therefore, to provide a little more expertise and guidance, and for brokers to help their clients avoid what may end up being costly oversights. It’s not enough for brokers to find out about these standard changes months after they have been introduced — as an industry, advisers need to be on the front foot, fully informed about what is changing well in advance.
This isn’t isolated just to HMO cases. As rules change across the board for borrowers, the best brokers resist merely taking orders and instead deliver a level of advice that ensures their clients end up in the best possible financial position.
We can’t just expect intermediaries to do this on their own, either. As an industry, there is far more that we can all do to help educate brokers on important developments and arm them with the tools they need to provide their clients with the most comprehensive advice possible.
Setting the standard
Lenders have more work to do in improving our standards, too. As a lender, we are committed to not just delivering the minimum expected, but actually leading the charge in raising those expectations.
For five straight years, the European credit rating agency ARC Ratings has awarded us with its highest possible grading for our loan servicing, while we ensured that the portfolio of assets included in our first securitisation earlier this year was of a suitably high standard to be awarded a AAA rating by Moody’s and Fitch.
Our drive is to work with more mortgage clubs, having already partnered with SimplyBiz, Paradigm, MCI and Brilliant Solutions. These partnerships reflect our desire to offer a better service to brokers and their clients to improve the way we deliver the funds they need.
In this hyper-competitive market, brokers and lenders alike need to be at the forefront when it comes to improving the standards of what we offer. Standing still may as well be going backwards — we all need to focus on keeping on top of what’s changing and developing new and improved ways to work.