Presentation on theme: "September 9, 2008 Make it happen Buy-to-let Alasdair McDonald and David Wilson, RBS Intermediary Partners The RBS Intermediary Roadshow."— Presentation transcript:
September 9, 2008 Make it happen Buy-to-let Alasdair McDonald and David Wilson, RBS Intermediary Partners The RBS Intermediary Roadshow
2 Buy-to-let - a silver lining?
The RBS Intermediary Roadshow 3 Agenda Market overview Opportunities for buy-to-let Advising on buy-to-let - how you can help Why NatWest?
The RBS Intermediary Roadshow 4 Market overview Pressure on disposable income, weakened housing market Movements in the Base rate - how does this affect the market? Impacts on interest rates / products: –credit crunch –funding –less FTB products, lower LTV restrictions First-time buyers - less demand due to: –reduced confidence, less affordability, tighter lending criteria Home movers - uncertain market, negative equity threat Where does this leave the buy-to-let market?
The RBS Intermediary Roadshow 5 Market overview continued House prices have fallen in the first half of this year Most commentators expect a 20-25% peak to trough fall in house prices Since the peak in October 06, house prices have fallen 9% Quarterly changes in House Price Inflation Source: Halifax house price index
The RBS Intermediary Roadshow 6 Market overview continued The buy-to-let market has continued to grow There are now over 1.1 million buy-to-let mortgages outstanding in the market Source: CML
The RBS Intermediary Roadshow 7 Market overview continued The buy-to-let market has continued to grow as a proportion of the total mortgage market, and now accounts for 13% of all mortgage completions Source: CML Mortgage market, by value (%)
The RBS Intermediary Roadshow 8 Is buy-to-let affected? Michael Coogan, CML Director General: The shortage of mortgage funding is creating similar problems for buy-to-let landlords as it is for other borrowers. However we expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now CML press release - 26 August 2008 The CML expects to see a continued healthy appetite for buy-to-let finance in 2008 in line with continued demand for rental property.
The RBS Intermediary Roadshow 9 Opportunities in the buy-to-let market? June 2008 figures from ARLA: –85% of landlords have no intention of selling in the next 12 months –72% expect to keep their properties for over 10 years –40% of landlords expect to invest further in buy-to-let market –60% prefer to arrange mortgages for their buy-to-let properties through a mortgage broker or financial adviser. A further 20% said it depended upon the property in question First-time buyers: nervousness / affordability issues mean more will turn to the rental market Buying property to let is no longer a short-term gain, but it remains a long- term investment
The RBS Intermediary Roadshow 10 Opportunities in the buy-to-let market? Migration impact: –over 500,000 people are coming to Britain from abroad each year - typically they rent Regional variations - one size does not fit all More and more multiple applicant buyers (deposits/affordability) Regeneration opportunities - East London / 2012 Olympics University towns Let-to-buy
The RBS Intermediary Roadshow 11 Broker opportunities for buy-to-let Understand the buy-to-let market (finding property, landlord responsibilities) Advising on: –Mortgages –know the market, find the best deal for the customer –Bridging finance: –understand short-term funding, open / closed loans –negotiate fees with lender –Insurance –Look at cross-selling opportunities (e.g. buildings and contents, legal expenses, emergency assistance, Rent guarantee and Tenants insurance) –look at commission opportunities All of these offer new opportunities to generate income
The RBS Intermediary Roadshow 12 Broker opportunities for buy-to-let Stay in touch - regular 6/12 month reviews –possibilities for fee-based advice Generate links with associated professionals - solicitors, estate agents, letting agents
The RBS Intermediary Roadshow 13 Buy-to-let knowledge - finding a property Build relationships with estate agents / rental associations to understand local opportunities Current national and local issues include: –Northern market prefers renovate to rent - suburban houses –Southern market prefers centrally located new-build flats –Southern buyers looking North for value purchases –Find key local hotspots for growth (industrial regeneration areas) Is the property right for potential tenants (e.g. near to a school for families, transport links, central for flats)
The RBS Intermediary Roadshow 14 Buy-to-let knowledge - being a landlord Need to know/understand: –Running costs - ground rent, service charges, repairs, letting/management fees –Landlord and tenant law –Tenancy agreements –Safety regulations and responsibilities –Costs of using a letting agent (could be % of the rent) –Costs/benefits of furnished v unfurnished properties –HIPs and EPCs are a legal requirement for landlords Advising on all of these can offer income opportunities
The RBS Intermediary Roadshow 15 Where to go for more help A number of associations have plenty of information available: –Council of Mortgage Lenders (www.cml.org.uk) –Association of Residential Letting Agents (www.arla.co.uk) –Royal Institution of Chartered Surveyors (www.rics.org/) –National Association of Estate Agents (www.naea.co.uk)
The RBS Intermediary Roadshow 16 Summary Buy-to-let market is sustainable Significant long-term income opportunities Lots of help is available NatWest buy-to-let proposition offers a full range of solutions
The RBS Intermediary Roadshow 17 NatWest - how we can help NatWest is the specialist buy-to-let lender for RBS Intermediary Partners Our buy-to-let proposition: –up to 4 applicants on a mortgage –a wide range of property types can be accepted –up to 10 loans accepted (across the RBS Group) –Fixed £ product/arrangement fees (not a % of the loan) –Flexible rental cover calculations: 110% at BoE rate % for loans 1-5, up to 75% LTV); 125% at BoE rate % for loans 5-10 and/or over 75% LTV –up to 85% max LTV (65% for new build flats) –fees-free re-mortgage package available
The RBS Intermediary Roadshow 18 Contact us Thank you For more information: call: